How this is worked out
Prepay: the extra goes into the loan each month until it closes, then the EMI and the extra are invested until the end of the term. Invest: the EMI is paid as it is and the extra is invested from month one. Both are valued at the end of the term, after capital gains tax and the tax on the staff-loan perk. This is the working in Chapter 21 of The Banker’s Money Book.
Questions bankers ask
Should a banker prepay a staff housing loan?
Usually not first. A staff loan is the cheapest money you will borrow while you stay in the bank. Clear cards, personal loans and outside loans first. Prepay a staff loan if you plan to leave the bank, are within ten years of 60, or want a sure return.
What does the break-even return mean?
The yearly return your investments must earn, after tax, for investing to beat prepaying. Below it, prepaying wins.
Is the perk tax counted?
Yes. A staff loan below SBI’s rate is a taxable perk. The longer the loan runs, the more perk tax you pay, so it is counted against investing.
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Indicative figures for planning. They follow the 12th Bipartite Settlement and 9th Joint Note (8 March 2024), IBA’s DA circular of 2 November 2026 and the Income-tax Act, 2025, as on 12 November 2026. Your bank’s payslip, service regulations, circulars and Form 16 prevail. Bankers Pioneer Academy is independent; not affiliated with IBA, IIBF, the Reserve Bank of India or any bank. Nothing you type here leaves your device.