You must Sign In to post a response.
  • Category: Miscellaneous

    Will you be happy when your bank gives cash back for EMI's paid?

    Yesterday the government has taken firm decision and advised the banks to return the money to all those who paid the EMI's during the pandemic period and they are going to get the cash back into their accounts. It is said that those who availed loans up to two crores are eligible to get this largess and surely the cash back would be blessing for those who are gasping for finance during the festive seasons and Deepavali is round the corner. Have you paid any EMI during the lock down and we are paying the educational loan monthly interest regularly.
  • #713074
    Yes, it is a welcome step by Government and also a trust-building exercise. The middle class hardly gets anything from the Government in the form of any cashback even the subsidies have now been slowly and steadily withdrawn. The middle class only knows earning and paying taxes and then fighting for amenities and basics.

    Getting a cashback for the EMIs paid will be a minuscule amount but still, something is better than nothing. Those who have honestly paid should be incentivized and this step is a good one.

    One more very important thing to remember, this incentive will be a taxable one and will have to be reported in your annual return as 'Income from Other Sources'. If you fall under the 30% tax bracket then, be prepared to shell out 30% of it as tax and so on for other tax slabs.

    Live before you leave.

  • #713080
    Mohan, if I am not mistaken, the latest order by the Finance Ministry is the approval of a scheme for grant of payment of the difference between simple interest and compound interest on all loans up to Rs 2 Crore and it is not a cashback of the EMI already paid. The scheme by which moratorium on payment of EMI that was declared earlier has already ended and the present order is based on an observation made by the Supreme Court in this connection. Those who have availed the benefits of the moratorium declared earlier won't be benefited by the present scheme. It is applicable to only those who have continued paying their EMI.

    Correct me if I am wrong or else, please correct your observation.

    'Knowledge is knowing what to say. Wisdom is knowing when to say it.' -Anonymous

  • #713081
    I too don't understand the cash back of EMI paid during the pandemic. How can the bank return the money paid during the last six month of pandemic period? Is there any logic in it? Late payment of EMI can be considered, but not returning the EMI paid. I think Mohan has posted a wrong message hurriedly.
    No life without Sun

  • #713096
    There is no announcement from the government that they will ask the banks to pay back the EMIs paid by us. It is the discussion regarding interest on interest for the differed payments. But nowhere it is mentioned that all amounts will be given back. A petition is there in Supreme court filed by Gajendra Sharma, a borrower from Agra requesting the court for a waiver of interest on interest during the moratorium because people are facing a lot of hardships. When the court asked the government they replied that they will waive 'interest on interest' on loans of up to 2 crores for six months through to the end of August. So let us not get into unnecessary illusions. Nothing is going to be credited into our accounts. We have to pay for all the EMIs. The only question is that the moratorium period given by the government is with no interest or with interest. Anyhow, I have no worries as I am paying all my EMIs regularly and I never differed it.
    always confident

  • #713098
    For those borrowers who have taken higher value loans, this may benefit if they had differed on paying back it. For higher value loans even the interest on interest amounts to a respectable figure. So some people can get some benefit out of the scheme.
    Knowledge is power.

  • #713105
    Mohan, you are once again advised to be clear when it comes to basing your threads on some news reports. Do not jump into conclusions by just reading the headlines. Make sure that what you are sharing here is authentic. Moreover, do not repeatedly post threads which are mere reproduction of news reports unless there is something valid to be discussed.
    'Knowledge is knowing what to say. Wisdom is knowing when to say it.' -Anonymous

  • #713116
    Here is the link of the news which happens to be authentic. back

    K Mohan @ Moga
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #713117
    I shared the interesting thread for the larger interest of the members who may be benefited.
    K Mohan @ Moga
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #713119
    Yes, it is a good idea to pay the EMIs promptly. Paying EMI is become very hard to somebody. As I heard in a discourse, the expansion for EMI is Extra Mental Illness instead of Equated Monthly Installment. If the banks offer such cash back or incentive for prompt payment of EMIs, fear and mental torture in the subjected persons will get reduced.

  • #713120
    Sir this payment of cash back for those who paid EMI during the stress period of pandemic.
    K Mohan @ Moga
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #713133
    Let us not expect any windfall from this.
    When government allowed moratorium for some months it was thought of as a simple deferment of the EMIs or payment amount due for relevant periods. That meant an account will not be treated as a defaulted account for not making repayment during those few months.
    But it was custom and inherent that the bank will charge interest regularly on the amount outstanding. Usually an EMI takes care of a part of principal and the full roisterer applied for that month. Moratorium meant not paying both interest and principal. The next month interest will charge interest on the unpaid interest and principal outstanding. So in effect this actually meant that there will be an accumulation of interest on interest charged also. So the moratorium actually caused more burden later. This is what borrowers wanted to avoid.

    So after the court case government agreed for real deferment of repayment and not total avoiding of interest during the period. It in effect means that the moratorium becomes a holiday period , but charging normal interest and avoiding compound interest( or interest on interest)

    This unfair on those who regularly paid their repayment commitment. So to be fair the government agreed to pass on the benefit to them also. It is not clear what and how this will be done?

    Let us wait for full details. I am not sure how they do for the credit card repayment etc. It will be not easy for people to calculate and verify in these cases unlike in bank EMI contexts.

    (Edited and updated): The benefit is avoiding interest on interest and passing on same benefit to those who repaid during moratorium. The amount will be the difference of compound interest and simple interest as per rate of interest on the loan as the beginning of moratorium.

    Hence it will be only some small amount for most borrowers.

  • #713138
    I have gone through the link you quoted. It talks about waiver of interest on interests for loans upto 2 crores. Your hurried post created confusion in the minds of the readers. Have patience to read such information in detail before you raise a thread.

    No life without Sun

  • #713140
    Refer my above post no.713133.
    I took an example where the normal interest amount (or normal interest component in the EMI) is Rs 10,000/- each month. And the interest rate is 10.5 per cent. Then the amount of total benefit for the six months is is about Rs 1838/-.

    I hope what I understood is correct. I am still not sure how the real application will turn out to be.

  • #713160
    Mohan, please go through the details in the link that you have provided. It is amply clear now that you have been guided by the heading of the report.
    'Knowledge is knowing what to say. Wisdom is knowing when to say it.' -Anonymous

  • Sign In to post your comments