No interest on interest for loans up to Rs 2 crore during moratorium

The ministry of finance has accepted a scheme to supply aid in curiosity compounding to debtors for the six-month mortgage moratorium interval prolonged in view of the Covid-19 pandemic.

This will are available in type of the grant of ex-gratia cost of the distinction between compound curiosity and easy curiosity for six months interval from March 1 to August 31.

“The undersigned is directed to convey that 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 mentioned in an official order on Friday.

The aid can be prolonged by monetary establishments like banks, non-banking monetary corporations (NBFCs), NCFC – Micro Finance Institutions, National Banks for Agriculture and Rural Development, housing finance corporations, National Housing Banks, and so forth.

This comes after the Supreme Court directed the Central authorities to implement the curiosity waiver on loans of as much as Rs 2 crore as quickly as attainable observing that it’s not honest on the federal government’s half to delay the implementation of its choice.

Borrowers within the segments — MSME loans, schooling loans, housing loans, shopper sturdy loans, bank card dues, vehicle loans, private loans to professionals and consumption loans — who’ve mortgage accounts having sanctioned limits and excellent quantity not exceeding Rs 2 crore as on February 29, 2020, can be eligible beneath the scheme.

“The rate of interest would be as prevailing on February 29, 2020, in case the rate of interest has changed thereafter, it shall not be reckoned for the purposes of this computation. They payable ex-gratia amount shall have to be credited to the account of the borrower by the respective lending institutions as ex-gratia payment under the scheme,” the order mentioned.

It mentioned that the train of crediting the quantity within the respective accounts of the eligible debtors by the respective lending establishment shall be accomplished on or earlier than November 5.

“After the exercise has been completed, lending institutions can lodge their claim for reimbursement latest by December 15, 2020. Claims shall be submitted to designated officers/ cell at the State Bank of India. SBI is advised to appropriately equip its designated officers/cell for processing such claims in a timely manner and to notify details of the same on its website,” it added.