RBI notifies Govt's scheme for interest waiver, asks banks, NBFCs to comply
Mumbai, October 27, 2020
The Reserve Bank of India (RBI) has notified the Central Government's scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers in specified loan accounts from March 1, 2020 to August 31, 2020 in view of the ongoing novel coronavirus disease (COVID-19) pandemic.
In a notification sent yesterday to all banks, financial institutions and non-banking financial companies, including housing finance companies, the central bank asked all lending institutions to comply with the provisions of the scheme and take necessary action within the stipulated timeline.
The Government had announced the scheme on October 23, which mandates ex-gratia payment to certain categories of borrowers by way of crediting the difference between simple interest and compound interest for the period between March 1, 2020 to August 31, 2020 by respective lending institutions.
Borrowers who have availed MSME, education, housing, consumer durable, automobile, personal and consumption loans and credit card dues, with sanctioned limits and outstanding amount of not exceeding Rs 2 crore as on 29.2.2020, shall be eligible under the scheme. The account should be standard and the loan should not be a non-performing asset (NPA) as on that date.
The ex-gratia payment under this scheme shall be admissible Imageirrespective of whether the borrower had fully availed or partially availed or not availed of the moratorium on repayment announced by RBI on March 27 and extended on May 23.
The period to be reckoned for crediting of difference between compound interest and simple interest by the lending institutions to eligible borrowers would be from 1.3.2020 to 31.8.2020 (six months / 184 days). For accounts closed during the said period, the period for crediting would be from 1.3.2020 and restricted to the date of closure of such account.
The benchmarks and modalities for ex-gratia payment of difference between compound interest and simple interest under the scheme would be as detailed in the operational guidelines. The rate of interest would be as prevailing on 29.2.2020. In case the rate of interest has changed thereafter, it shall not be reckoned for the purposes of the computation. The payable ex-gratia amount shall have to be credited to the account of the borrower by the respective lending institutions as ex-gratia payment under the scheme. This has to be completed on or before November 11, 2020.
After that, the lending institutions can lodge their claim for reimbursement latest by December 15.
Lending institutions have to put in place a grievance redressal mechanism for the eligible borrowers for redressal of their grievances arising out of the scheme within one week from the date of issuance of the guidelines.
The Government has made it clear that such payment does not constitute a contractual, legal or equitable liability of the Central Government and is only an ex-gratia payment to thedesignated class of borrowers in view of the COVID-19 pandemic.
Any borrower whose aggregate of all facilities with lending institutions is more than Rs. 2 crore (sanctioned limits of outstanding amount) will not be eligible for ex-gratia payment under the scheme.