Centre declares interest waiver scheme for loans till Rs. 2 crore

Photo Credits: PTI

The Centre had passed an approval on Friday regarding the scheme of ex-gratia payment based on the differences between the compound interest and simple interest for a period of six months of loans up with amount ranging up to Rs. 2 crore.

According to the official order from the government, “The ex gratia payment under this scheme shall be admissible irrespective of whether the borrower had fully availed or partially availed or not availed of the moratorium on repayment announced by RBI on 27.03.2020 and extended on 23.5.2020.”

Earlier, on March 27, the Reserve bank of India (RBI) had officially declared a three-month moratorium on loan tenures from March 1 to facilitate the borrowers to bridge the economic fall-out triggered by Covid-19. Going ahead, RBI further  increased the extension period in May till August 31. The total expenditure incurred by the government for enforcing the scheme would account to Rs. 6,500 crore.

On October 14, the Supreme Court issued the order that the benefits of the waivers must be implemented for the waivers at the earliest. The Supreme Court who pushed the trial to November 2, revealed to the advocates to be appearing for the Centre and banks that “Diwali is in your hand.”

About the scheme:

The scheme will be applicable for a wide range of loans which includes MSME loans, education loans, housing loans, consumer durable loans, credit card dues, automobile loans, personal or professional loans. The borrowers with an exceeding sum of Rs. 2 crore including the aggregate will not have the eligibility. The loan needs to come under the category of non-performing asset s of February 29, 2020.

The calculation of the six months will be from March 1, 2020 to August 31, 2020. The same rate of interest from February would continue and the amount needs to be credited before November 5. Post the amount s credited by lending institute, a claim can be registered foe reimbursement by December 15, 2020. Every lending institution will have a grievance redressal system for the borrowers with eligibility and the claims presented by both the bank and lending institution will be passed through State Bank of India.