New Delhi, October 24
In a relief for borrowers at the start of the festive season, the government on Friday night announced the waiver of interest on loans of up to Rs 2 crore whether the moratorium has been enforced or not.
The Department of Financial Services has issued operational guidelines in the context of the Supreme Court’s decision to implement the Interest Relief Scheme, which is likely to cost the Treasury 6,500 crore.
On October 14, the Supreme Court ordered the Center to implement “as soon as possible” interest relief on loans of up to Rs 2 crore under the RBI Moratorium Scheme in view of the COVID-19 pandemic. 19, claiming that the ordinary man’s Diwali is in the hands of the government. .
According to the guidelines, the program can be used by borrowers in specified loan accounts for a period from March 1 to August 31, 2020.
“Borrowers who have loan accounts with sanctioned limits and outstanding amounts not exceeding Rs 2 crore (total of all facilities with lending institutions) as of February 29 will be eligible for the scheme,” he said.
In accordance with the eligibility criteria mentioned in the guidelines, the accounts must be standard as of February 29, which means that they must not be non-performing assets (NPA).
Housing loans, education loans, credit card charges, car loans, MSME loans, consumer durables and consumer loans are covered by the program.
In accordance with the scheme, credit institutions will credit the difference between compound interest and simple interest with respect to eligible borrowers in the respective accounts for the said period, regardless of whether the borrower fully or partially avails itself of the moratorium on repayment. of the loan announced by the RBI. on March 27, 2020.
The scheme is also applicable to those who did not benefit from the moratorium scheme and continued to repay the loans.
Credit institutions after crediting the amount will claim reimbursement from the central government.
Hearing the case on October 14, the Supreme Court noted that it was concerned about how the benefit of the interest waiver would be granted to borrowers and said the Center had made a “welcome decision” in taking note of the fate of the common man, but the authorities did not issue any orders in this regard.
“Something concrete needs to be done,” a bench headed by Justice Ashok Bhushan had said, adding, “The benefits of waivers to borrowers up to Rs 2 crore must be implemented as soon as possible.”
The high court, which released the case for hearing on November 2, told lawyers appearing for the Center and the banks that “Diwali is in your hands.”
The Center recently told the Supreme Court that going further than fiscal policy decisions already taken, such as waiving compound interest charged on loans up to Rs 2 crore during a six-month standstill period, could be “detrimental” to the overall economic scenario. , the national economy and the banks may not bear “the inevitable financial constraints”.
The high court is hearing a batch of petitions that have raised questions about the six-month loan moratorium period announced due to the COVID-19 pandemic.
The bench, which also includes Judges RS Reddy and MR Shah, said that when the authorities have decided on something, it must be implemented. PTI