The government has said it will implement a loan relief plan before November 5, aimed at helping borrowers during the coronavirus pandemic and repaying interest on applicable interest on eligible loan repayments due between March and August. In the guidelines on loan relief released Wednesday, the Department of Financial Services said that the relief will be available to borrowers regardless of whether they choose to defer their EMIs, either in whole or in part. The government said lending institutions will first credit the amount (the difference between compound interest and simple interest over the six-month period) on eligible loans of up to Rs 2 crore, which will be repaid by the government as part of the scheme.
Here are 10 things to know:
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In accordance with the operating guidelines issued by the Department of Financial Services, borrowers can use the scheme on specific loan accounts during a period from March 1 to August 31, 2020.
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The compound interest relief will be applicable to standard accounts on February 29, 2020, and the scheme will be implemented on November 5, according to the official notification.
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The interest rate would be posted as the rate on the loan agreement, according to the notice. Any change in the rate after February 29 will not be considered for the scheme.
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The scheme is for personal and micro and micro, small and medium-sized business loans of up to Rs 2 million, as well as credit card installments. Home, education, auto, and consumer durables loans are also included in the plan.
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The government will have to shell out 6.5 billion rupees for the implementation of the scheme, the PTI news agency reported, citing sources.
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On October 14, the Supreme Court ordered the government to implement the interest waiver on loans of up to Rs 2 crore under the Reserve Bank of India moratorium scheme “as soon as possible” in view of the COVID pandemic. -19.
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Any delay in implementing an “interest on interest” waiver on loans of up to Rs 2 million is not in the interest of the common man, said the court, which includes Justices Ashok Bhushan, R Subhash Reddy and MR Shah. (Also read: “The Common Man’s Independence Day …”: little push from the superior court for loan relief before November 2)
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The Supreme Court has included the matter for its hearing on November 2. The high court is hearing a series of petitions that have raised issues related to the six-month loan default period announced by the RBI to support borrowers against the COVID-19 pandemic.
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In March, the RBI had given borrowers an option to delay their EMIs for six months, until August 31, as restrictions related to the coronavirus pandemic caused a record 23.9% contraction in the economy in the quarter ending June 30.
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The RBI and the government have already told the high court that the moratorium can be extended for up to two years.
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