The government will pay interest on interest charged during the moratorium period to everyone before 5 November.
The loan holders will get cashback from the bank, availing the 6-month loan moratorium of COVID-19 . The government will pay interest on interest taken during the moratorium period before November 5. Its cost to the government will come around 5,000 crores. This amount will be transferred by the bank to the loan holders in their bank account.
How much is the moratorium period?
The moratorium period was 6 months, from 1 March to 31 August. After the end of this period, banks started taking interest on the unpaid loan interest on the borrowers from September.
Also Read: Didn’t skip EMIs during lockdown? Get cashback from your bank: Govt
What will the debt holders get relief?
During the moratorium period, the government will pay the difference between interest on interest and simple interest. Banks will transfer this amount directly to the account of the borrowers.
Who is eligible for this relief?
All the borrowers are eligible for this relief.
Those who did not take advantage of the moratorium or partially availed it will also be paid.
The loan holders who have taken a loan of 2 crore till February 29 will also be covered under this.
MSME loans, housing loans, education loans, auto loans, consumption loans and credit card dues are included in this.
How will the calculation be done?
The calculation of the amount given to the borrowers will be as follows:
The applicable interest rate will be as on 29 February.
In the case of credit cards, this will be the average rate charged on EMI during this period.
The outstanding balance on 29 February will be used for calculations.
Repayments made during the period will be ignored for equality.
How long can the bank claim the government?
It is expected that in the next few days, banks will start crediting these funds to the account of the loan holders. After credit this amount, banks and financial institutions can claim the central government for its payment by 15 December.
All national banks, financial institutions and banks, urban co-operative banks, state co-operative banks and housing finance companies have been instructed to follow the guidelines for interest waiver.
