The central government has announced that lenders will be able to repay the difference between compound interest and simple interest charged on loans up to Rs 2 crore under the Reserve Bank of India (RBI) loan scheme by November 5 on the accounts of eligible borrowers.
The Finance Ministry has said that after crediting the amount, the lenders will ask the central government to repay it.
In an affidavit filed in the Supreme Court, the government said the Ministry of Lending had issued a plan to lend this amount to lenders’ accounts for a period of 6 months following the announcement of Govt-19. Infectious condition.
Under the scheme, all lending institutions (as defined under Section 3 of the scheme) will credit the difference between compound interest and simple interest in the respective accounts of eligible borrowers during the period from March 1, 2020 to August 31, 2020. Said.
It said: The Central Government has advised all the lending institutions described in its 3rd section to implement the scheme and credit the amount calculated as per the scheme in the respective accounts of the borrowers by November 5, 2020.
An affidavit has been filed in the High Court, which is hearing a summons, which has raised issues including interest on interest.
The affidavit states that such amounts will be credited by the lending institutions regardless of whether such eligible borrowers have received the full amount or partially received it or have not received the foreclosure. Postponement of payment of installments as per the circulars issued by the Reserve Bank dated March 27, 2020 and May 23, 2020.
After crediting the amount to the accounts of the eligible borrowers, the lenders request repayment from the Central Government through the Nodal Agency of State Bank of India as prescribed under this scheme.
The decision was made after careful consideration of the overall economic situation, the nature of the borrowers, the impact on the economy and many other factors.
On October 14, the apex court observed that the Center should expedite the implementation of interest rebates of up to Rs 2 crore on loans under the Reserve Bank’s ban scheme and said that ordinary Diwali is in the hands of the government.
More than the fiscal policy decisions already taken, Rs. The Center had earlier told the court that it would be “detrimental” to the overall economic situation, with the exception of compound interest rebates of up to Rs 2 crore. The national economy and banks should not take on “inevitable financial constraints”.
The Reserve Bank of India (RBI) had also filed an affidavit in the Supreme Court that a levy of more than six months would lead to the abolition of the overall debt discipline, which would have a weak impact on the debt-making process in the economy.
The affidavits were filed following an order of the High Court on October 5. The KV Kamath Committee on Debt Restructuring was asked to register recommendations as to the announcements and circulars issued so far on Govt-19 related stress and debt ban in various sectors.
It also said that the Supreme Court’s interim order dated September 4, which barred the classification of accounts as non-performing accounts on the basis of orders issued by the Reserve Bank, may be vacant with immediate effect.
The Kamath Committee had made recommendations for 26 sectors which could be a factor by the lending institutions in finalizing the credit resolution plans and said that banks could adopt a standardized approach based on the severity of the corona virus outbreak in one sector.
Initially, the Reserve Bank issued a circular on March 27, which allowed lenders to repay installments due on epidemics from March 1, 2020 to May 31, 2020.
Subsequently, the moratorium was extended to August 31 this year.