All lenders will credit the difference between compound interest and simple interest on loans to eligible borrowers for the period from March 1 to August 31.
The Center has informed the Supreme Court that the difference in compound interest and simple interest charged during the six-month moratorium period on eight categories of loans worth up to ₹ 2 crore will be repaid to borrowers by November 5. 2020.
The plan is intended to provide “additional relief” to borrowers affected by financial difficulties caused by the pandemic.
“The Central Government has ordered that all credit institutions implement the scheme and pay the amount calculated according to the scheme in the accounts of the borrowers before November 5,” the Finance Ministry said in a brief sworn statement in court. .
All lending institutions will credit the difference between compound interest and simple interest on the loans in the respective accounts of eligible borrowers for the period from March 1 to August 31, according to the affidavit.
“The amount will be credited by each of the credit institutions regardless of whether said eligible borrowers have made total or partial use or not of the moratorium / postponement in the payment of installments according to the circulars dated March 27 and May 23 issued by the RBI, “explains the affidavit.
The exemption scheme will cover MSMEs, education, housing, consumer durables, credit cards, auto, personal and consumer loans.
Clause three of the exemption plan defines “all financial institutions” to include banking companies, public sector banks, cooperative banks, regional rural banks, all Indian financial institutions, non-bank financial companies, RBI registered home finance companies and national housing banks.
At the last hearing on October 14, a bench of three judges headed by Judge Ashok Bhushan had questioned the need for the government to wait an entire month, until November 15, to notify the implementation of a compound interest waiver scheme. (interest on interest). accrued during the moratorium against loans worth up to ₹ crore.
The Ministry told the court that the Union Cabinet had approved the plan on October 21.
The next judicial hearing on the matter is scheduled for November 2 to evaluate the efforts made up to then by the government.
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