Mumbai: On Tuesday, the Reserve Bank of India (RBI) instructed all lenders to pay the borrower of a particular loan account the difference between compound interest and simple interest for the six months to 31 August 2020. The central bank’s notice came after the government set November 5 as the deadline for banks to implement a six-month “interest” scheme waiver.
“We recommend that all lenders be guided by the scheme’s provisions and take the necessary steps within the prescribed schedule,” the RBI said in a notice.
On October 23, the government announced a scheme that would require the borrower of a particular loan account to pay the difference between compound interest and simple interest for six months at no charge by crediting the difference to a particular category of borrowers. Between simple interest and compound interest for the period from March 1, 2020 to August 31, 2020 by each lending institution. Loans such as education loans, credit card fees, car loans, MSME loans, mortgages, personal loans, consumer loans and professional loans are covered by this scheme.
The account is standard as of February 29th, not the default. This scheme is useful for borrowers who have not fully, partially or at all used the moratorium. Therefore, even if someone has not selected the mortgage moratorium, they are still eligible for this scheme.
In addition, those who do not choose the moratorium during the coronavirus blockade will receive a free payment or cashback.
“After depositing the above amount into each eligible borrower’s account, the lender will claim reimbursement from the central government through the State Bank of India’s node agency, as stipulated in the scheme.” Added.
RBI provided EMI and credit card membership repayments in the moratorium for three months in March after the coronavirus outbreak. The central bank then extended its three-month period to August 31, 2020. Whether interest on interest during this moratorium will be charged. So, at that time, a petition was filed with the Supreme Court in this regard. The petitioner demanded that the Supreme Court not claim interest during the moratorium.
Following this, the Supreme Court instructed the Center to implement an interest waiver.
RBI requires lenders to pay interest on interest schemes free of charge
Source link RBI requires lenders to pay interest on interest schemes free of charge