Interest Waiver Scheme

The Central government has announced the rules for waiver of the interest that payable by borrowers who had opted for the moratorium on their loans between March 1, 2020 and August 31, 2020.

What is Interest Waiver Scheme?

The government will give eligible borrowers ex-gratia payment of the difference between the compound interest and simple interest for the six-month moratorium period between March 1, 2020 and August 31, 2020. The Reserve Bank of India (RBI) had in March 2020, offered a three-month moratorium on loans, that enabled borrowers to defer repayments on EMIs and other loans. This grace period for the loan and waiver of compound interest was aimed at providing borrowers the relief amid the economic impact of the COVID-19 pandemic situation.

The eligibility criteria for the Interest Waiver Scheme are as follows:

• The classification of the loans that are eligible includes housing loans, MSME loans,credit card dues, Education loans, automobile loans, consumer durable loans, personal, professional as well as consumption loans.
• The loan account should not show any irregularity of repayment as on February 29, 2020.
• The loan amount should not greater than 2 crore, gross the facilities from the lending institutions.
• The lending institution should be either banking company, the public sector bank, co-operative bank or regional rural bank, All India Financial Institution, Non-Banking Financial Company, Housing Finance Company.
• The payment will be made to the borrowers account regardless of whether the borrower has fully, partially or not taken the advantage of the moratorium.
• The difference between the compound interest and simple interest will be credited to the borrowers loan account for period between March 1, 2020 and August 31, 2020.

The lending institution is required to credit the payment (amount) to the borrowers account by November 5, 2020.