New Delhi: The finance ministry on Saturday issued the guidelines and announced to surely implement the waiver of ‘interest on interest’ on loans of up to ?2 crore for the six-month moratorium. The Centre today approved the scheme for ‘grant of ex-gratia payment of difference between compound and simple interest to borrowers of specified loan accounts’ from March 1-August 31.
The ‘ex-gratia payment’ or the benefit will have to be routed through lending institutions, the ministry said in a circular addressed to banks and other lending institutions on October 23.
The lender has to credit the amount to the account of the borrower on or before 5 November, giving relief to borrowers ahead of Diwali. Thereafter, lenders will have to claim reimbursement from the government by December 15.
Micro, small and medium enterprises (MSMEs), education, housing, consumer durables, credit card dues, automobile, personal and professional and consumption will be the benefitted. The outstanding amount cannot exceed ?2 crore, and should not be a non-performing asset (NPA) as on February 29, 2020. This means that the while interest on loan has not been waived but the amount that has to be credited tod the borrower will be calculated using the difference between simple and compound interest.
The scheme will also be valid for borrowers who availed the moratorium fully, partially or not at all, as mentioned in the circular. “Any borrower whose aggregate of all facilities with lending institutions is more than ?2 crore (sanctioned limits or outstanding amount) will not be eligible for ex-gratia payment under this scheme," the circular said.
The Centre may have to take a hit of ?6,500 crore for the implementation of the scheme, a senior government official said. The rate of interest will be as per the rate mentioned in the loan agreement, in case of education, housing, automobile, personal and consumption loans. In case of credit card dues, the interest rate will be the weighted average lending rate (WALR) charged by the card issuer for transactions financed on an EMI basis from its customers during 1 March-31 August, it said.
Posted Date : 24-10-20