Bonanza For Loan Borrowers! Reserve Bank Of India Ask Banks To Impose Waiver Of Interest on Interest

RBI asks banks to enforce a dispense of interest on interest by Nov 5

As per the decision made by the Government the Reserve Bank of India (RBI) on Tuesday commanded all the banks including non-banking financial companies to make certain that the Scheme of renunciation of interest on interest for loans up to Rs.2Crore for the six months moratorium period must be brought into practice sincerely by November 5.

All lending institutions are directed to complete the move of crediting the amount in the account of the borrowers on November 5.

This Scheme of granting of ex-gratia payment of differentia of compound interest and simple interest for six months to borrowers in all specified loan accounts was announced by the government last Friday.

The loans which are covered under this scheme consist of housing, education, credit card dues, auto loans, MSME loans, consumer durable loans and consumption loans. This scheme also dictates an ex-gratia subscription to a bracket of borrowers by crediting the differentia of simple interest and compound interest dating from March1, 2020 to August 31, 2020.

Minister of Finance in India Nirmala Sitharaman took to twitter and said “RBI advises all lending institutions to be guided by the provision of the scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers on specified loans accounts and take necessary actions within the stipulated timeline”. The Reserve Bank of India through a notification said-“All lending institutions are advised to be guided by the provision of the scheme and take necessary action within the stipulated timeline”.

The Scheme is suitable for all those who have not taken advantage of the moratorium schemes and carried on with the restitution of loans. After completion of crediting the amount all the lending institutions will call the government for their refunds.

This step of repayment of debt for six month taken by the RBI is only to help businesses and individuals rise over the financial problems on account of disturbances in normal business activities