Loan Moratorium Latest News: Money relief! Diwali gift from Modi government - Amount to be credited before this date

Loan Moratorium Latest News:It's a big money relief to loan borrowers from Modi government amid the pandemic. In a big development, the Reserve Bank of India (RBI) has notified the Centre's scheme for ex-gratia payment of difference between interest on loans of up to Rs 2 crore - waiver of interest on interest scheme.

The Reserve Bank on Tuesday asked all lending institutions, including non-banking financial companies, to implement the waiver of interest on interest for loans up to Rs 2 crore for the six months moratorium period beginning March 1, 2020.

"All lending institutions are advised to be guided by the provisions of the Scheme and take necessary action within the stipulated timeline," the RBI said in a notification.

Amount to be credited before this date

-The government had asked the lending institutions to complete the exercise of crediting the amount in the accounts of borrowers by November 5.

- 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 lending institutions after crediting the amount will claim the reimbursement from the central government.

Grant of ex-gratia payment

-On October 23, the government had announced the scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts.

-The scheme mandates ex-gratia payment to certain categories of borrowers by way of crediting the difference between simple interest and compound interest for the period between March 1, 2020 to August 31, 2020 by respective lending institutions.

Who all are eligible?

-Housing loans, education loans, credit card dues, auto loans, MSME loans, consumer durable loans and consumption loans are covered under the scheme.

- The scheme is also applicable on those who have not availed the moratorium scheme and continued with the repayment of loans.

The RBI had announced a moratorium on repayment of debt for six months beginning March 1, 2020 to help businesses and individuals tide over the financial problems on account of disruption in normal business activities.