Implement the interest waiver on interest scheme by November 5, RBI tells lenders
On Tuesday, the Reserve Bank of India has asked all lending institutions to ensure that interest waiver scheme on interest on loans up to INR 2 crore for six months moratorium period is brought into effect by November 5. This is in line with the government’s decision which also includes non-banking financial institutions.
The government had announced last Friday the scheme that would grant ex-gratia payment of difference between simple interest and compound interest for six periods in specific loan amounts. The lending institutes have been asked by the RBI to credit the amount by November 5 to borrowers’ accounts.
The loans included under the scheme are housing loans, education loans, credit card dues, MSME loans, auto loans, consumption loans and consumer durable loans.
Under the scheme, ex-gratia payment is provided to certain borrowers’ categories by crediting the difference in compound interest and simple interest for time frame of March 1, 2020 to August 31, 2020.
RBI has said, “All lending institutions are advised to be guided by the provisions of the Scheme and take necessary action within the stipulated timeline.”
Ministry of Finance had issued the guidelines regarding scheme on October 23. This was after the apex court had directed the Centre on October 14 to implement the waiver scheme as soon as possible citing the Covid-19 stress on the common man and approaching festival season.
Finance Minister Nirmala Sitharaman tweeted, “RBI advises all lending institutions to be guided by the provisions of the scheme for grant of ex-gratia payment of difference between compound interest & simple interest for 6 months to borrowers in specified loan accounts & take necessary action within the stipulated timeline.”
The lending institutions will claim to be reimbursed by the central government after crediting the amount.