Good news for borrowers! RBI asks lenders to apply interest waiver on interest

The Reserve Bank of India (RBI) on Tuesday called on all lending agencies, including non-bank financial corporations, to apply the interest waiver on loan interest up to 2 crore rupees for the duration of the six-month moratorium period starting March 1. 2020.

The Center announced on October 23 the scheme to grant an ex gratia payment of the difference between simple and compound interest for six months to borrowers of certain loan accounts.

The scheme authorizes the ex gratia payment to a specific category of borrowers by crediting the difference between simple and compound interest for the period between March 1, 2020 and August 31, 2020, by the respective credit institutions.

Read also: Center to waive ‘interest on interest’ on loans up to Rs 2 crore during moratorium

The government had asked these facilities to complete the exercise of crediting the amount in borrowers’ accounts by November 5.

“All credit institutions are advised to be guided by the provisions of the program and to take the necessary measures within the allotted time frame,” the RBI said in a notification.

The Ministry of Finance had issued the operational guidelines in the context of the Supreme Court’s decision to implement the interest relief regime.

On October 14, the Supreme Court ordered the Center to implement “as soon as possible” an interest waiver on loans of up to 2 crore rupees under the RBI’s moratorium program due to the COVID-19 pandemic, claiming that ordinary man’s Diwali is in the hands of the government.

Home loans, education loans, credit card contributions, car loans, MSME loans, durable consumer loans, and consumer loans are covered by the program.

In accordance with the scheme, credit institutions credit the difference between compound interest and simple interest with respect to eligible borrowers on their respective accounts for said period, whether the borrower has made use of all or part of the moratorium on the loan. loan repayment announced by the RBI on March 27, 2020.

Read also: “Public Goes Through Hell” Due to Interest on Interest: Borrower Informs SC on Loan Moratorium Issue

The regime is also applicable to those who have not taken advantage of the moratorium regime and have continued to repay loans.

Credit institutions, after having credited the amount, will claim reimbursement from the central government.

The RBI had announced a six-month debt repayment moratorium from March 1, 2020, to help businesses and individuals overcome their financial problems due to the disruption of normal business activities.

Read also: RBI increases banks’ overall exposure limit for small businesses to Rs 7.5 cr

(With entries from PTI.)

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