New Delhi: Your Diwali celebrations would have an additional cheer this time if you are one of the borrowers and eagerly waiting for the EMI cashback scheme.
Banks have started crediting the difference between compound interest and simple interest in the account of borrowers for the specified loan accounts during the moratorium period.
Want to check if you have recieved EMI cashback or not?
News Agency PTI has reported that some banks have started the process of cashback. "Dear customer credited COVID-19 Relief ex-gratia of ... On November 3 to your account," PTI quoting a message from a public sector bank to a customer said.
So if you have not got an SMS, you can check your bank statement to know if the money has been credited into your account or not.
Ex-gratia payment or waiver of interest on interest Scheme
Last week, the Reserve Bank had asked all lending institutions, including non-banking financial companies, to implement the waiver of interest on interest for loans up to Rs 2 crore for the six months moratorium period beginning March 1, 2020.
On October 23, the government had 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. The scheme 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.
The government had asked the lending institutions to complete the exercise of crediting the amount in the accounts of borrowers by November 5. Housing loans, education loans, credit card dues, auto loans, MSME loans, consumer durable loans and consumption loans are covered under the scheme.
As per the scheme, the lending institutions shall credit the difference between compound interest and simple interest with regard to the eligible borrowers in respective accounts for the said period irrespective of whether the borrower fully or partially availed the moratorium on repayment of loan announced by the RBI on March 27, 2020.
After crediting the said amount in the respective accounts of eligible borrowers, the lending institutions would claim reimbursement from the Central government through the nodal agency of State Bank of India as stipulated under the scheme, an affidavid by the Centre has said.
Who is eligible for waiver of interest on interest Scheme
Issuing additional frequently asked questions (FAQs) on the scheme, the finance ministry on Wednesday said consumptions loans, including those backed by gold as collateral, are eligible for the waiver. This is the second additional FAQs released by the ministry and comes just a day ahead of the last date for implementing the scheme. However, loans against fixed deposits [including Foreign Currency Non-Resident (Bank) FCNR(B) account, bonds and other interest bearing instruments], and shares etc., and loans given for investment in financial assets (including shares, debentures etc.) are not eligible for coverage under the scheme.
Understanding the loan Moratorium
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).