RBI asks lending institutions to implement waiver of interest on interest scheme

The scheme mandates ex-gratia payment to certain categories of borrowers by way of crediting the difference between simple interest and compound interest.

RBI asks lending institutions to implement waiver of interest on interest scheme

The scheme mandates ex-gratia payment to certain categories of borrowers by way of crediting the difference between simple interest and compound interest. Image: Twitter/@RBI

Mumbai, October 27 

The Reserve Bank on Tuesday asked all lending institutions, including non-banking financial companies, to implement the waiver of interest on interest for loans up to Rs 2 crore for the six months moratorium period beginning March 1, 2020.

On October 23, the government had announced the scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers in specified loan accounts.

The scheme mandates ex-gratia payment to certain categories of borrowers by way of crediting the difference between simple interest and compound interest for the period between March 1, 2020, to August 31, 2020, by respective lending institutions.

The government had asked the lending institutions to complete the exercise of crediting the amount in the accounts of borrowers by November 5.

"All lending institutions are advised to be guided by the provisions of the Scheme and take necessary action within the stipulated timeline," the RBI said in a notification.

The finance ministry had issued the operational guidelines in the backdrop of the Supreme Court's direction to implement the interest waiver scheme.

The apex court on October 14, 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.

Housing loans, 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 to 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.

The RBI had announced a moratorium on repayment of debt for six months beginning March 1, 2020, to help businesses and individuals tide over the financial problems on account of disruption in normal business activities. PTI 

Don't Miss

Tracing the origins of Pashmina

Tracing the origins of Pashmina

Up against issues of racism Down Under

Up against issues of racism Down Under

Why we need to mock ourselves a little, reset our systems

Why we need to mock ourselves a little, reset our systems

Trump’s coup de tweet

Trump’s coup de tweet

Respect every opinion

Respect every opinion

Top Stories

Farmer leaders finalise route for ‘Kisan tractor parade’ on Republic Day

Farmer leaders finalise route for ‘Kisan tractor parade’ on Republic Day

‘There will be no disruption in national Republic Day parade...

SC to hear pleas on farm laws after recusal of member from panel set up to resolve impasse

SC to hear pleas on farm laws after recusal of member from panel set up to resolve impasse

In an “extraordinary” interim order on January 12, a bench h...

SC-appointed panel on farm laws to hold first meeting on January 19

SC-appointed panel on farm laws to hold first meeting on January 19

Bhartiya Kisan Union president Bhupinder Singh Mann, however...

UK's Boris Johnson invites PM Modi to attend G-7 summit

UK's Boris Johnson invites PM Modi to attend G-7 summit

Prime Minister Johnson also plans to visit India before the ...

Cities

View All