Implement waiver of interest on interest scheme: RBI

New Delhi, Oct 28 : The Reserve Bank of India has asked all the lending institutions to implement the waiver of interest on interest schemes for loans up to Rs 2 crore. The lending institutions will also include non-banking financial companies.

 

The RBI has urged the banks to implement the interest waiver for a moratorium period of six months. The lending institutions have now been mandated to grant ex-gratia payment for certain categories of borrowers by crediting the difference between simple interest and compound interest in between March 1- August 31, 2020. The Centre, on October 23, had announced a scheme that granted ex-gratia payment of difference between compound interest and simple interest for six months for borrowers for specified loan accounts.

 

The RBI has urged the banks to implement the interest waiver for a moratorium period of six months. The lending institutions have now been mandated to grant ex-gratia payment for certain categories of borrowers by crediting the difference between simple interest and compound interest in between March 1- August 31, 2020.

 

The centre had announced a scheme that granted ex-gratia payment of difference between compound interest and simple interest for six months for borrowers for specified loan accounts, on October 23. RBI had announced a moratorium on repayment of loan for six months in effect from March 1, 2020, which was provided in order to help businesses and individuals to overcome the financial problems that they faced during the COVID-19 lockdown.

 

Later, the Supreme Court had asked the Centre to implement the interest waiver scheme on loans up to Rs 2 crore under the RBI moratorium scheme on October 14, 2020. According to the court's order, the Reserve Bank in its notification has urged all the lending institutions that they should be guided by the scheme’s provisions and take necessary action within the timeline.