Loan Moratorium: Banks to Give Cashback for Interest Waiver During Loan Moratorium by Nov5

By Srijan-

The Centre has informed the Supreme Court that lenders have been directed to credit in the accounts of eligible borrowers by November 5 the difference between compound interest and simple interest collected on loans of up to ₹ 2 crore during the RBI’s loan moratorium scheme. The Ministry of Finance has said that after crediting this amount, the lending institutions would claim reimbursement from the Central government.

• 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, to August 31, 2020.
• The Central government has directed that all banks and lending institutions described in clause 3 thereof to implement the scheme and credit the amount calculated as per the scheme in the respective accounts of borrowers by November 5, 2020.
• The cashback will be offered to all loan customers regardless the borrowers have fully availed or partially availed or have not availed of the moratorium.
• The government will compensate the banks and lending institutions. The banks or lending institutions can claim the amount as reimbursement from the Government of India through the nodal agency – State Bank of India.

The Kamath Panel had made recommendations for 26 sectors that could be factored by lending institutions while finalising loan resolution plans and had said that banks could adopt a graded approach based on the severity of the coronavirus pandemic on a sector.