As an important Diwali gift to borrowers, the Ministry of Finance has approved guidelines for an ex gratia repayment plan of the difference between compound and simple interest for six months of loans up to ₹2 crore.
The guidelines emerged after the Supreme Court ordered the Center to implement “as soon as possible” the interest exemption on loans of up to ₹2 million rupees under the RBI moratorium scheme in view 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 that does not exceed ₹2 million rupees (sum of all facilities with lending institutions) as of 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.
“Credit institutions will credit the difference between compound interest and simple interest with respect to eligible borrowers, regardless of whether said borrowers have fully or partially made use of the moratorium on repayment of the respective loans,” the statement said by FinMin. .
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 PTI sources, the government will have to pay ₹6.5 billion rupees for the implementation of the scheme.
Hearing the matter on October 14, the Supreme Court noted that it was concerned about how the benefit of the interest exemption would be awarded to borrowers and said that the Center had made a “welcome decision” in noting the plight of the man. common, but the authorities have not issued any order on the matter.
In the wake of the coronavirus pandemic in the country, the Reserve Bank of India announced in March a moratorium on repayment of term deposits for three months. Subsequently, the central bank extended the moratorium period until August 31. The goal was to give borrowers more time to settle IME payments amid the economic fallout of the lockdown, without being classified as doubtful assets (NPA).
.
