By Priyanka Sambhav
Government is all set to implement the interest waiver plan by November 5. The aim is to help the borrowers whose source of income took a hit due to the Coronavirus pandemic. Banks and the lending institutions will have to forego the ‘interest on interest’ Borrowers with a loan up to Rs 2 crore will be eligible for reimbursement of the difference between the compound interest and simple interest for the period between March 1 to August 31 2020.
The Supreme Court’s last hearing of loan moratorium was adjourned with these lines – “Their Diwali is in your hand.” The apex court on October 14 very specifically told the government to implement the interest waiver relief “as soon as possible”- which ushed the government to expedite the implementation.
Here are the 5 takeaways-
1) Eligible loans
This scheme will give relief to personal and MSME borrowers for loans up to Rs 2 crore. Home loan, education loan, automobile loan, consumer durable loan , Micro, small and medium enterprises(MSME) borrowers as well as credit card dues are a part of this relief scheme. The scheme will be availed for the period of March 1 to August 31, 2020.
2) Non-moratorium borrowers to benefit too
The Department of Financial Services guideline outlined that this relief will be rolled out to those borrowers as well who did not opt for the moratorium and were making timely payment of their EMI’s. So if you continued paying your EMI’s when RBI had granted an option to defer the payment of EMI’s till August 31, then there is a bonus for you.
3) Banks will be reimbursed by the government
As per the guidelines issued by Department of Financial Services, lending institution, i.e. the bank or NBFC’s will first credit the amount on eligible loans, which will be then reimbursed by the government to the banks. News agency PTI reported quoting sources that government will be shelling out Rs 6500 crore on the implementation of loan relief scheme.
4) Rate of Interest
The government notification said that the rate of interest would be reckoned as the rate in the loan agreement. Any change in the rate after February 29 will not be reckoned for the scheme.
5) Next Hearing
The next date of hearing in Supreme court is November 2. The court is hearing a batch of petitions which have raised issues concerning the six-month loan moratorium period announced due to the COVID-19 pandemic.
