CENTRE ORDERS BANKS TO WAIVE INTEREST ON SMALL LOANS UP TO ₹2 CRORE

NEW DELHI: The government has directed lending institutions to credit ‘ interest on interest’ charged from borrowers for loans up to ₹2 crore in the sixmonth moratorium period to provide relief to takers of loans for home, education, automobiles, consumer durables, micro, small and medium enterprises (MSMES) and credit card dues, a finance ministry order said.

In view of “unprecedented and extreme Covid-19 situation” the Centre has approved “Scheme for grant of ex gratia payment of difference between compound interest and simple interest for six months [March 1, 2020 to August 31, 2020] to borrowers in specified loan accounts,” the order issued late on Friday said.

A finance ministry official said the announcement is as per the commitment of the Centre before the Supreme Court that relief will be provided to the borrowers before Diwali. “The benefit will be extended to eligible borrowers through lending institutions and they will be reimbursed the money,” the official said requesting anonymity. HT reported it on Monday.

Those who have not availed moratorium will also get the benefit provided their loan amount is not more than ₹ 2 crore, the official said. “Borrowers... who have loan accounts having sanctioned limits and outstanding amount of not exceeding ₹2 crore as on 29.2.2020, shall be eligible under the scheme,” the order said.“any borrower whose aggregate of all facilities with lending institution is more than ₹2 crore will not be eligible for ex-gratia payment under the scheme,” it said.