Mumbai: Reserve Bank of India (RBI) on Tuesday notified the government’s scheme of interest waiver during the moratorium period and asked all lending institutions to take necessary action within the stipulated timeline.
The RBI said in a release, “The Government of India has announced the 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 (1.3.2020 to 31.8.2020) on October 23, 2020, 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.”
According to the scheme, the government will pay the difference between compound interest and simple interest. The ex-gratia payment of ‘interest on interest’ will be applicable for six months and only for selective specified loans.
The Central Government had submitted an affidavit in the Supreme Court earlier this month which supported the waiver of compound interest for loans under a moratorium for certain categories.
The Supreme Court on October 14 had asked the government to implement the decision soon.