Interest on Interest: Centre Announces Waiver For Loans up to Rs 2 Crore; Housing Loan, Education Loan, Credit Card Dues, MSME Loans Covered Under The Scheme

Team Latestly
·2-min read

New Delhi, October 25: Giving relief to borrowers, the Centre on Friday night approved a scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers for loans up to Rs two crore. The benefits will be routed through lending institutions, as per eligibility criteria.

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Borrowers will get the benefit irrespective of whether moratorium was availed or not. The Central government's announcement came days after the Supreme Court directed the Centre to implement "as soon as possible" interest waiver on loans under the RBI moratorium scheme in view of the COVID-19 pandemic. Dussehra Bonus For Non-Gazetted Central Government Employees Approved by Union Cabinet.

Government's Order:

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

The government said, "Borrowers who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs two crore (aggregate of all facilities with lending institutions) as on February 29 shall be eligible for the scheme." For availing the scheme, borrowers account should not be Non-Performing Asset as on February 29.

On October 10, The Centre informed the Supreme Court that it could not give more relief to different sectors amid the coronavirus pandemic other than already announced financial packages and waiver of interest-on-interest on loans up to Rs two crore in eight categories.

The top court on October 14, observed that it was concerned about how the benefit of interest waiver would be given to borrowers and said the Centre had taken a "welcome decision" by taking note of the plight of the common man, but authorities have not issued any order in this regard.