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Banks to refund the compound interest charged during the moratorium period, on specified loan accounts

Bank loan

RBI directed the institutions to ensure the waiver by 5th November

Banks are refunding the compound interest that was charged on specified loan accounts during the moratorium period. RBI( Reserve Bank Of India) had asked all the institutions to ensure that scheme of waiver of interest on loans upto Rs 2 crore for the six month moratorium period by 5th November. 

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Message received from the public sector bank to its customer:

Here is a message received from a public sector bank to one of its customers,” Dear customer, credited Covid-19 Relief ex-gratia of … on November 3 to your account.”

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Banks to refund the compound interest charged during the moratorium period, on specified loan accounts

On Wednesday, the finance ministry said that the consumption loans including those backed by gold as collateral are also eligible for the waiver. It said that Individual loans from eight eligible categories of borrowers are covered under the scheme. And it is irrespective of the nature of the guarantee. The eight categories include Micro, Small and Medium Enterprises(MSME).

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Banks compound interest

Grant of ex-gratia payment of the difference between simple interest and compound interest:

Last month, the Supreme Court directed the government to implement the scheme for grant of ex-gratia payment of the difference between compound and simple interest for six months. Various loans are covered in the scheme including house loans, education loans, auto loans, MSME loans, credit card dues, consumption loans and consumer durable loans. The two loans which are not part of the waiver are the agriculture and allied activity loans.

Guidelines issued by the finance ministry on 23 October:

The guidelines were issued by the finance ministry on 23 October after the direction of the supreme court to implement the interest waiver scheme.

 

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