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Relief to borrowers on loans not repaid during 6-month moratorium
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SME Times News Bureau | 25 Oct, 2020
After announcing a host of
demand generating initiatives earlier this month, the government has now
approved a new scheme for ex gratia payment to borrowers that will
reimburse differential between compound and simple interests for the
six-month loan moratorium period.
This means all borrowers who
took advantage of loan moratorium extended by the government between
March 1 and August 31 will pay only simple interest on repayments not
made during the moratorium period. Excess amount charged due to
compounding of interest would be returned as ex gratia payment.
The
Finance Ministry announced the scheme after the Supreme Court directed
the Centre to implement the relief as soon as possible and ahead of
upcoming Diwali.
As per the details of the scheme put out by the
Department of Financial Services (DFS), the ex gratia payments will be
made only to borrowers whose aggregate loan sanctions and outstanding is
not more than Rs 2 crore as on February 29, 2020.
All categories of loans -- MSME, education, housing, personal, consumer -- and credit card dues will be eligible.
Also,
the borrower accounts with the lending institutions should be standard
as of February-end. Loans extended by all institutions, including banks,
NBFCs, HFCs, MFIs, cooperative banks will be covered under the scheme.
As
per teh court's direction, the Finance Ministry had directed financial
institutions to credit ex gratia payments into the accounts of borrowers
by November 5.
The Centre will reimburse the ex gratia payments and the lending institutions can lodge their claims designated SBI Cell.
To
provide relief from higher interest rates, it had been decided that the
new scheme will take the interest rate prevalent during February-end to
do the calculations for relief.
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