Consumer loans will also be eligible for the interest exemption scheme, the finance ministry clarified on Wednesday. “Consumer loans, including those backed by gold as collateral, are eligible under the interest exemption scheme,” the Finance Ministry said.
On Wednesday, the ministry issued another round of frequently asked questions about the latest “interest on interest” scheme. Following the instructions of the Supreme Court, the central government agreed to “provide ex gratia payment to the borrower’s account of the difference between compound interest and simple interest on the loan accounts for the period from March 1, 2020 to on August 31 “.
Loan accounts with outstanding up to ₹2 million rupees will be eligible for the interest exemption scheme. The account should be standard as of February 29, 2020. The calculated period for reimbursement will be from March 1 to August 21, 2020, that is, a period of six months or 184 days, the Finance Ministry said.
The lending institution must be a banking company, public sector bank, cooperative bank or regional rural bank, all-India financial institution, non-bank finance company, or RBI registered home finance company. or to the national housing bank for extending the ex gratia payment.
The benefit will be extended to loans available in eight categories: 1) Loans for micro, small and medium-sized enterprises (MIPYMES), 2) Education loans, 3) Housing loans, 4) Durable consumer goods loans, 5) Installments credit cards, 6) Cars. loans, 7) personal and professional, 8) consumer loans. However, loans for agriculture and related activities are not part of the exemption.
“Individual loans from the eight eligible categories of borrowers, including those categorized as micro, small and medium enterprises (MSMEs) by the lender, are covered by the scheme regardless of the nature of the guarantee,” the ministry added.
Banks have already started implementing repayment to eligible borrowers. The Reserve Bank of India asked all credit institutions, including non-bank financial companies, to implement the “interest exemption” scheme before November 5.
Credit card users will also get the benefits of the interest waiver scheme. Individual loans sold by one lender to another can also take advantage of this scheme. “Loans for cars, even for commercial vehicles, such as four-wheeled taxis, are eligible under the scheme,” clarified the Ministry of Finance.
The ex gratia payment under this plan will be eligible regardless of whether the borrower has made full or partial use or not of the moratorium on repayment announced by the RBI, the ministry mentioned above.
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