Just before the festive season, centre has given a relief to borrowers. For loans up to ₹ 2 crore, the Ministry of Finance has announced a waiver of interest on interest charged. As per a circular by the Department of Financial Services, all borrowers no matter if they made use of the moratorium or not will be eligible for the relief. The circular laid the rules for financial institutions on granting ex-gratia payment of difference between simple interest and compound interest for six months to borrowers. Borrowers with loan accounts having sanctioned limit and outstanding credit not beyond ₹ 2 crore, will be entitled as a part of the scheme.
This will be for the period between March 1 to August 31, 2020. The scheme will cover housing loans, consumer durable loans, credit card dues, MSME loans, Education loans, automobile loans, and consumption loans. This decision is likely to cost the government of India ₹ 6,500 crore. The eligible candidate should not be having a loan as non-performing asset (NPA) as on February 29, 2020. Under the scheme, the lending institutions that will be considered include either a co-operative bank or a regional rural bank, or All India Financial Institution, a non-banking financial institution, banking company, or a public sector bank, housing finance company or a micro finance institution.
The government took this decision after Supreme Court told the government that the common man’s Diwali is in its hands this year. The Supreme Court had hailed the Centre’s move of waiving interest on interest. However, it was not happy with the lack of action on that front.
Courtesy: Financial Express