Diwali Gift: Banks to issue cashback by 5 November for `loyal` loan customers

Government has filed affidavit stating that the interest waiver scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020.

New Delhi: Have you been one of those borrowers who opted to keep paying loan EMIs during the moratorium period? Well, you could get some benefits for doing that. 

The Centre in its affidavit to the Supreme Court has said that the difference between compound interest and simple interest will be deposited in the account of borrowers by November 5. The Central Government has filed its detailed affidavit before the Supreme Court in connection with the loan moratorium case where it has stated that the interest waiver scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020.

This decision was taken by the Ministry of Finance and has been approved by the Union Cabinet in its meeting held on October 21. The Centre stated that the interest waiver scheme is applicable (and those can avail) to those who have not availed the moratorium scheme and continued with the repayment to their existing loans.

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The Apex Court is scheduled to hear the loan moratorium petitions seeking a direction to waive interest on interest on November 2.

The affidavit filed by the Centre, through the Ministry of Finance, brings relief to a large section of borrowers. The affidavit said the difference between compound interest and simple interest that deposited in the account of borrowers by November 5. 

The benefit will be applicable to those who borrowed between March 1 and August 31, 2020. Under the Scheme, all lending institutions shall credit the difference between compound interest and simple interest in the respective accounts of eligible borrowers for the period between March 1, 2020, till August 31, 2020, the affidavit of the Centre stated.

This amount shall be credited by each of the lending institutions, irrespective of whether such eligible borrowers have fully availed or partially availed or have not availed of the moratorium such as deferment in payment of instalments, the affidavit stated.

In the wake of coronavirus pandemic in the country, the Reserve Bank of India had in March announced a moratorium on repayment of EMIs and credit card dues for three months. The central bank later extended the moratorium period till August 31. As per the eligibility criteria mentioned in the guidelines, the accounts should be standard as on February 29 which means that it should not be Non-Performing Asset (NPA).

Housing loan, education loans, credit card dues, auto loans, MSME loans, consumer durable loans and consumption loans are covered under the scheme. The scheme is also applicable on those who have not availed the moratorium scheme and continued with the repayment of loans.