Increasing interest rates are set to burden borrowers in the prevailing scenario. Government has therefore asked public sector banks to show slight leniency to the borrowers. The government has advised that borrowers be given an option to choose from either increasing tenor of their loan or increasing EMIs.
According to sources, there has been a 15% rise in EMIs of borrowers following the rate hike scheme. The finance ministry has thus asked banks to offer this option to banks.
"It is in the borrower's interest to stick to a shorter term so that the principal amount keeps decreasing. So, unless you are absolutely strained for funds, it is advisable to increase the EMI," said a banker.