Simple interest accumulated during moratorium remains the bigger concern

The government has announced it will take upon itself the burden of ‘interest on interest’ incurred by borrowers during the moratorium period. Loans of up to Rs 2 crore will be eligible. Suppose you had a loan of Rs 1 lakh at the start of the moratorium period. The interest rate is 10 per cent and repayment period is 5 years. Your EMI is Rs 2,027, of which Rs 1,361 is the principal component and Rs 667 the interest.  “When you avail of a moratorium, you don’t repay the principal component of the EMI, so the loan outstanding remains the same. And you als.....

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