Lending Institutions To Implement the Interest Waiver Scheme By 5th Nov

The Reserve Bank of India (RBI) instructs all lending institutions which includes even the non-banking financial institutions to execute an interest waiver concerning interest for loans worth up to Rs 2 crore in relation to six months moratorium period starting 1 March 2020.

On 23 October, a scheme was announced by the government in relation to the grant of ex-gratia payment of the difference between simple interest and compound interest for a six month period (1 March to 31 August 2020) to borrowers in prescribed loan accounts. The lending institutions have been instructed by the government to finish the exercise of crediting the amount in the respective accounts of borrowers within 5 November.

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Housing loans, credit card dues, education loans, MSME loans, auto loans, consumption loans, and consumer durable loans are covered under this scheme. Also, the scheme will apply to those who have not opted for the moratorium scheme and have continued to repay their loans. After crediting the amount, the lending institutions will need to make a reimbursement claim from the central government within 15 December.

The government has also mentioned that a compensation amount will be provided to borrowers having loans of up to Rs 2 crore and who have not availed the moratorium during the six month period.

The Supreme Court has been receiving petitions asking for a complete interest waiver during the moratorium period. The apex court is to hear the concerns next on 2 November. The court is to listen to a batch of petitions that have highlighted concerns related to the six-month loan moratorium period which was announced by RBI with an aim to extend support to borrowers amidst the COVID-19 pandemic.

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