Govt. issues directions for Interest Waiver: Scheme for grant of ex-gratia payment [Read Letter]
Central govt approves scheme for grant of ex-gratia payment of the difference between compound interest & simple interest for six months to borrowers in specified loan accounts
Following the announcement of the lockdown, the government will waive compound interest on those who have taken loans between March 1, 2020 and August 31, 2020.
If you had not skipped your EMI instalments during the lockdown, you could be eligible for cashback from your bank. The government on late Friday night announced waiver of interest on interest for loans up to Rs 2 crore irrespective of whether moratorium was availed or not. "In view of the unprecedented and extreme COVID-19 situation, the Central government has approved scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers in specified loan amounts [March 1, 2020, to August 31, 2020]. Benefits under the scheme would be routed through lending institutions," the ministry said in official order. The Department of Financial Services came out with operational guidelines in the backdrop of the Supreme Court's direction to implement the interest waiver scheme, which is likely to cost the exchequer Rs 6,500 crore.
The apex court on October 14 had directed the Centre to implement "as soon as possible" interest waiver on loans of up to Rs 2 crore under the RBI moratorium scheme in view of the COVID-19 pandemic saying the common man's Diwali is in the government's hands.
As per the guidelines, the scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020. "Borrowers who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs 2 crore (aggregate of all facilities with lending institutions) as on February 29 shall be eligible for the scheme," it said.
As per the eligibility criteria mentioned in the guidelines, the accounts should be standard as on February 29 which means that it should not be Non-Performing Asset (NPA). Housing loan, education loans, credit card dues, auto loans, MSME loans, consumer durable loans and consumption loans are covered under the scheme.
As per the scheme, the lending institutions shall credit the difference between compound interest and simple interest with regard to the eligible borrowers in respective accounts for the said period irrespective of whether the borrower fully or partially availed the moratorium on repayment of loan announced by the RBI on March 27, 2020.
The scheme is also applicable on those who have not availed the moratorium scheme and continued with the repayment of loans. The lending institutions after crediting the amount will claim the reimbursement from the central government. Hearing the matter on October 14, the Supreme Court observed that it was concerned about how the benefit of interest waiver would be given to borrowers and said the Centre has taken a "welcome decision" by taking note of plight of the common man, but authorities have not issued any order in this regard.
"Something concrete has to be done," a bench headed by Justice Ashok Bhushan had said, adding, "Benefits of waivers to borrowers up to Rs 2 crore must be implemented as soon as possible." The top court, which posted the matter for hearing on November 2, told the advocates appearing for the Centre and banks that "Diwali is in your hand". The Centre recently told the apex court that going any further than the fiscal policy decisions already taken, such as waiver of compound interest charged on loans of up to Rs 2 crore for six months moratorium period, may be "detrimental" to the overall economic scenario, the national economy and banks may not take "inevitable financial constraints".
The top court is hearing a batch of petitions which have raised issues concerning the six-month loan moratorium period announced due to the COVID-19 pandemic. The bench, also comprising Justices R.S. Reddy and M.R. Shah, said when authorities have decided something then it has to be implemented.
Central govt approves scheme for grant of ex-gratia payment of difference between compound interest & simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020). Benefits to be routed through lending institutions, as per eligibility criteria.
Central govt approves scheme for grant of ex-gratia payment of the difference between compound interest & simple interest for six months to borrowers in specified loan accounts
Following the announcement of the lockdown, the government will waive compound interest on those who have taken loans between March 1, 2020 and August 31, 2020.
If you had not skipped your EMI instalments during the lockdown, you could be eligible for cashback from your bank. The government on late Friday night announced waiver of interest on interest for loans up to Rs 2 crore irrespective of whether moratorium was availed or not. "In view of the unprecedented and extreme COVID-19 situation, the Central government has approved scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers in specified loan amounts [March 1, 2020, to August 31, 2020]. Benefits under the scheme would be routed through lending institutions," the ministry said in official order. The Department of Financial Services came out with operational guidelines in the backdrop of the Supreme Court's direction to implement the interest waiver scheme, which is likely to cost the exchequer Rs 6,500 crore.
The apex court on October 14 had directed the Centre to implement "as soon as possible" interest waiver on loans of up to Rs 2 crore under the RBI moratorium scheme in view of the COVID-19 pandemic saying the common man's Diwali is in the government's hands.
As per the guidelines, the scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020. "Borrowers who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs 2 crore (aggregate of all facilities with lending institutions) as on February 29 shall be eligible for the scheme," it said.
As per the eligibility criteria mentioned in the guidelines, the accounts should be standard as on February 29 which means that it should not be Non-Performing Asset (NPA). Housing loan, education loans, credit card dues, auto loans, MSME loans, consumer durable loans and consumption loans are covered under the scheme.
As per the scheme, the lending institutions shall credit the difference between compound interest and simple interest with regard to the eligible borrowers in respective accounts for the said period irrespective of whether the borrower fully or partially availed the moratorium on repayment of loan announced by the RBI on March 27, 2020.
The scheme is also applicable on those who have not availed the moratorium scheme and continued with the repayment of loans. The lending institutions after crediting the amount will claim the reimbursement from the central government. Hearing the matter on October 14, the Supreme Court observed that it was concerned about how the benefit of interest waiver would be given to borrowers and said the Centre has taken a "welcome decision" by taking note of plight of the common man, but authorities have not issued any order in this regard.
"Something concrete has to be done," a bench headed by Justice Ashok Bhushan had said, adding, "Benefits of waivers to borrowers up to Rs 2 crore must be implemented as soon as possible." The top court, which posted the matter for hearing on November 2, told the advocates appearing for the Centre and banks that "Diwali is in your hand". The Centre recently told the apex court that going any further than the fiscal policy decisions already taken, such as waiver of compound interest charged on loans of up to Rs 2 crore for six months moratorium period, may be "detrimental" to the overall economic scenario, the national economy and banks may not take "inevitable financial constraints".
The top court is hearing a batch of petitions which have raised issues concerning the six-month loan moratorium period announced due to the COVID-19 pandemic. The bench, also comprising Justices R.S. Reddy and M.R. Shah, said when authorities have decided something then it has to be implemented.
Central govt approves scheme for grant of ex-gratia payment of difference between compound interest & simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020). Benefits to be routed through lending institutions, as per eligibility criteria.
The central government has taken a big step to get the market back on track due to the Corona epidemic and lockdown. The Modi government issued a circular on Saturday
"Those who have taken loans of up to Rs 2 crore from national banks or other financial institutions like NBFCs," he said. Their lockdown time i.e. total compound interest of 6 months will be waived.
This means that after the announcement of the lockdown, between March 1, 2020 and August 31, 2020, the government will waive the compound interest on those who have taken out a loan. That is, if a customer feels compounded interest instead of normal interest due to non-payment of the loan, the government will reimburse him.
The Reserve Bank had earlier asked banks to pay interest rates. So that they can avoid the burden of paying interest during the time of the epidemic, now this decision of the central government has become a big relief for small and medium enterprises and individual loan takers. What is a government announcement?
The government said in a circular that all banks
would now pay the gap between compound interest and normal interest charged to debtors.
"Those who have taken loans of up to Rs 2 crore from national banks or other financial institutions like NBFCs," he said. Their lockdown time i.e. total compound interest of 6 months will be waived.
This means that after the announcement of the lockdown, between March 1, 2020 and August 31, 2020, the government will waive the compound interest on those who have taken out a loan. That is, if a customer feels compounded interest instead of normal interest due to non-payment of the loan, the government will reimburse him.
The Reserve Bank had earlier asked banks to pay interest rates. So that they can avoid the burden of paying interest during the time of the epidemic, now this decision of the central government has become a big relief for small and medium enterprises and individual loan takers. What is a government announcement?
The government said in a circular that all banks
would now pay the gap between compound interest and normal interest charged to debtors.
I.e. those who have paid compound interest by the banks during the lockdown. They will get their distance back. So those who have not paid interest during the moratorium will have to pay only modest interest.
ગુજરાતી ન્યુઝ રિપોર્ટ અહિથી વાંચો
ZEE GUJARATI રીપોર્ટ વાંચવા અહિં ક્લીક કરો