The loan outstanding as of February 29 would be the reference amount for calculating the differential interest amount under the ‘scheme for grant of ex-gratia payment of difference between compound interest and simple interest’ according to the FAQs released by the Finance Ministry.
The Reserve Bank on Tuesday asked all lending institutions, including non-banking financial companies, to ensure that the scheme of waiver of interest on interest for loans up to Rs 2 crore for the six-month moratorium period is implemented by November 5, as decided by the government.
Last Friday, 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 lending institutions have been asked to complete the exercise of crediting the amount in the accounts of borrowers by November 5.
According to the Frequently Asked Questions (FAQs) on the scheme, the relief shall cover the following segments –MSME loans, education loans, housing loans, consumer durable loans, credit card dues, automobile loans, personal loans to professionals and consumption loans.
Loan accounts with sanctioned limits and outstanding not exceeding Rs 2 crore (aggregate of all facilities with all the lending institutions) and such accounts should be standard in the books of the lending institutions as on cut off date of February 29, 2020, it said.
The period reckoned for refund shall be from March 1 to August 21, 2020 that is six months period or 184 days, it said.
The ex gratia relief will be credited to the account of all eligible borrowers without any requirement to apply, it said.
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 scheme is also applicable on those who have not availed the moratorium scheme and continued with the repayment of loans.
The scheme, which was announced as per the direction of the Supreme Court, is likely to cost the exchequer Rs 6,500 crore.