New Delhi: As a major relief to borrowers in the midst of a global epidemic, the Finance Ministry has issued guidelines for implementing a six-month ‘interest on interest’ rebate. Loans of up to Rs 2 crore will be provided to individual borrowers and small businesses.
According to reports, the government will have to spend Rs 7,000 crore to implement the project.
In the wake of the corona virus outbreak in the country, the Reserve Bank of India in March announced a three-month ban on repaying EMIs and credit card arrears. The central bank then extended the ban until August 31. According to the qualifications mentioned in the guidelines, the accounts must be up to standard by February 29, i.e. it must not be non-performing assets (NBAs).
Home loans, education loans, credit card balances, auto loans, MSME loans, consumer durable loans and consumer loans are covered under this scheme.
Under the scheme, lenders will lend on March 27, 2020 the difference between compound interest and simple interest to eligible borrowers in their respective accounts during those periods, regardless of whether the borrower has received full or partial repayment of the loan declared by the Reserve Bank.
The scheme is also applicable to those who have not availed the default scheme and are continuing to repay the loans.
Lenders will demand repayment from the Central Government after crediting this amount.
In view of the Govt-19 epidemic, the Supreme Court on October 14 ordered immediate implementation of interest rebate of up to Rs 2 crore on loans under the Reserve Bank’s ban scheme. Ordinary Diwali is in the hands of the government.
The Center recently told the apex court that doing anything other than monetary policy decisions, such as a compound interest rebate of up to Rs 2 crore for a six-month grace period, would be “detrimental” to the overall economic situation. , The national economy and banks should not take “inevitable financial restrictions”.
Under this, the government will pay the total interest, i.e. the difference between the interest on interest and the simple interest, on the deferral of a loan of up to Rs 2 crore for a period of six months.
For micro and small enterprise (MSME) loans, education loans, housing loans, consumer durable loans, credit card balances, auto loans, personal and professional and consumer loans, loans of less than Rs 2 crore in eight categories The benefit will be extended. .