The Finance Ministry has come forward in aid to the bank borrowers. Late Friday night, the government announced an interest waiver interest for loans up to Rs 2 crore, irrespective that moratorium was availed or not.
In the official order, the ministry said: “In view of the unprecedented and extreme situation of COVID-19, the central government approved a scheme to grant of ex gratia payment of the difference between compound interest and simple interest for a period of six months to borrowers in specified loan amounts [March 1, 2020, to August 31, 2020]. The benefits under the scheme would be routed through lending institutions.”
Guidelines Of The Interest Waiver Scheme
According to the guidelines issued by the Department of Financial Services, borrowers can benefit from the scheme on specific loan accounts for a period from March 1 to August 31, 2020, irrespective that the borrower availed the moratorium fully or partially or not at all.
"Borrowers who have loan accounts having sanctioned limits and an outstanding amount not exceeding Rs 2 crore (aggregate of all facilities with lending institutions) as on February 29 shall be eligible for the scheme," it said.
Housing loans, education loans, credit card dues, auto loans, MSME loans, consumer durable loans, and consumer loans are covered under the scheme.
Lending institutions shall credit the difference between compound interest and simple interest with regard to eligible borrowers in the respective accounts.
The difference between compound interest and simple interest, according to the scheme, will be credited to the borrower's loan account for the period between March 1 and August 31. The interest rate on which the computation would be worked out will be as of February 29, 2020.
The government has directed lenders to deposit the amount to eligible borrowers before November 5.
The lending institution must be a banking company, a public sector bank, a cooperative bank, a regional rural bank, an all-India financial institution, a non-bank financial institution, a home finance company, or a microfinance institution.
In the case of credit card dues, the interest rate will be the weighted average loan rate (WALR) charged by the card issuer for transactions financed based on the monthly fee that flows from its customers between March 1 and August 31, it said. Penal interest and penalty for late payment will not be reckoned as part of the contracted rate or WALR.
Eligibility For The Waiver Scheme
The scheme will be valid for borrowers who availed of the moratorium totally, partially, or not at all, as mentioned in the circular.
Anil Pinapala, CEO, Vivifi finance India private limited., said that any borrower who maintained their account in standard state and makes payments pre-COVID-19 is eligible for this credit
Reports say that the government will have to shell out Rs 6,500 crore for the implementation of the scheme
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