After the Reserve Bank of India (RBI) directive to all lending institutions, including non-banking financial companies, to ensure that the scheme of waiver of interest-on-interest for loans up to Rs 2 crore for the six-month moratorium period is implemented by November 5, banks and financial institutions have started refunding borrowers the compound interest charged on specified loan accounts during the moratorium period.
The RBI directive was in the wake of the finance ministry, on Wednesday, saying consumption loans, including those backed by gold as collateral, are eligible for the waiver. "Individual loans from the eight eligible categories of borrowers, including those categorised as Micro, Small and Medium Enterprises (MSME) by the lending institution, are covered under the scheme irrespective of the nature of guarantee," it said.
The government had, last month, announced the scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts. Housing loans, education loans, credit card dues, auto loans, MSME loans, consumer durable loans and consumption loans are covered under the scheme.
If you are a costumer eligible for the refund, here is how you will get to know you have received the cashback. The banks will send a text message to the mobile number registered with them, with details of the exact amount being refunded.
According According to news agency PTI, some banks have already began refunding. " Dear customer credited COVID-19 Relief ex-gratia of ... on November 3 to your account," a message from a public sector bank to a customer said.
It may be noted that loans declared as non-performing assets as on February 29, 2020 are not eligible under the scheme.
The lending institutions, after crediting the amount, will claim the reimbursement from the central government. The RBI had announced a moratorium on repayment of loans for six months beginning March 1, 2020 to help businesses and individuals tide over financial problems on account of the COVID-19 crisis.
(With PTI inputs)