The Finance Ministry has approved guidelines for a scheme to grant ex-gratia payment of the difference between compound interest and simple interest for six months of loans amounting to Rs 2 crore.
The guidelines came after a Supreme Court’s direction to the Centre to implement interest waiver on loans of up to Rs 2 crore under the RBI moratorium scheme “as soon as possible” in view of the COVID-19 pandemic.
As per the operational guidelines issued by Department of Financial Services, the scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020.
“Borrowers who have loan accounts having sanctioned limits and outstanding amount of 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 loan, 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 applicable on 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.
According to sources, the government will have to shell out Rs 6,500 crore for the implementation of the scheme.
The apex court is hearing a clutch of petitions which have raised issues concerning the 6-month loan moratorium period announced due to the COVID-19 pandemic.
Hearing the matter on October 14, the top court observed that it was concerned about how the benefit of interest waiver would be given to borrowers and said the Centre has taken a “welcome decision” by taking note of plight of the common man, but authorities have not issued any order in this regard.
The SC, which posted the matter for hearing on November 2, told the advocates appearing for the Centre and banks that “Diwali is in your hand”.