Finance Ministry to pay difference between compound and simple interest on loans upto Rs 2 crore

New Delhi (ILNS): In view of the extreme COVID-19 situation, the Finance Ministry has approved the guidelines for a scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for the six-month moratorium period on loans up to Rs 2 crore.

According to notification issued on October 23, the Department of Financial Services has approved the operational guidelines which can be availed by borrowers on loan accounts for the period from March 1 to August 31. 

“Borrowers who have loan accounts sanctioned limits and outstanding amount of not exceeding Rs 2 crore (aggregate of all facility with lending institutions) as on February 29, this year, shall be eligible under the scheme,” it said. 

MSME Loans, Education Loans, Housing Loans, Consumer Durable Loans, Credit Card Dues, Automobile Loans, Personal Loans to Professionals, Consumption Loans are covered under the scheme. 

“Any borrower whose aggregate of all facilities with lending institutions is more than Rs 2 crore (sanctioned limits or outstanding limits) will not be eligible for ex-gratia payment under the scheme,” it said. 

This has come as a relief for many before the Diwali festival and due to a batch of petitions which were filed before the Supreme Court seeking waiver on interest during the loan moratorium period. 

A bench of Justices Ashok Bhushan, R. Subhash Reddy & M. R. Shah is hearing the petition seeking waiver of accruing interest during the six-month loan moratorium period.

The Centre in its affidavit filed before the Supreme Court had agreed to waive compounded interest for loans upto Rs 2 crore during the six-month loan moratorium period.

The matter is slated for next hearing on November 2.