New Delhi: The Ministry of Finance has approved guidelines for a scheme granting ex gratia payment of the difference between compound and simple interest for six months of loans worth Rs 2 million.
The guidelines came after the Supreme Court’s order to the Center to implement the waiver of interest on loans of up to 2 million rupees under the RBI moratorium scheme “as soon as possible” in light of the COVID-19 pandemic.
According to the operating guidelines issued by the Department of Financial Services, borrowers can take advantage of the scheme on specific loan accounts during a period from March 1 to August 31, 2020.
“Borrowers who have loan accounts that have sanctioned limits and an outstanding amount not to exceed Rs 2 crore (sum of all facilities with credit institutions) on February 29 will be eligible for the scheme,” he said.
Home loans, education loans, credit card fees, auto loans, MSMEs, durable consumer loans, and consumer loans are covered by the plan.
Under the scheme, credit institutions will credit the difference between compound interest and simple interest with respect to eligible borrowers in the respective accounts for said period, regardless of whether the borrower made full or partial use of the moratorium on repayment of the loan. announced by the RBI. on March 27, 2020.
The scheme is applicable to those who did not avail themselves of the moratorium scheme and continued with the repayment of loans.
Credit institutions after crediting the amount will claim reimbursement from the central government.
According to sources, the government will have to disburse 6.5 billion rupees for the implementation of the plan.
The supreme court is hearing a series of petitions that have raised issues related to the announced 6-month loan default period due to the COVID-19 pandemic.
Hearing the matter on October 14, the higher court noted that it was concerned about how the benefit of the interest waiver would be awarded to borrowers and said the Center has made a “welcome decision” in noting the plight of the common man, but the authorities have not issued any warrant about it.
The SC, which published the matter for its hearing on Nov. 2, told advocates for the Center and the banks that “Diwali is in your hands.”
(With PTI inputs)
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