RBI asks lending institutions to implement waiver of interest on interest scheme

New Delhi: The Reserve Bank has asked all lending institutions to credit the interest waiver on loans upto two crore rupees for the six months moratorium period beginning March 1, 2020. The government 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.

Under the scheme, the lending institutions have been mandated to grant ex-gratia payment to certain categories of borrowers through crediting the difference between simple interest and compound interest for the period between March 1- August 31, 2020.

In a notification issued yesterday, RBI advised lenders to take necessary action within the stipulated timeline. The government has asked banks to credit the amount to borrowers by 5th of November. 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 availed the moratorium on repayment of loan or not.

Post payment, lenders can claim the amount from the central government. The scheme will cover education, housing, automobile loans, MSME loans, personal loans to professionals, credit card dues, consumer durable loans and consumption loans.