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Government of India approves scheme for interest waiver on loans up to Rs. 2 Crore

Finally Government announced the Interest on interest waiver on loan moratorium benefit for those who have loans before the Covid pandemic. Who are all eligible for this waiver benefit and how much you can benefit?

Many loan borrowers were not able to pay their EMIs due to Lockdown, Job Loss or Pay Cuts. Government of India has taken a decision to provide a moratorium of EMIs on loan for 3 months, which was later extended for another 3 months. During this period loan borrowers who availed loans can request for a moratorium and need not pay EMIs. However, there would be interest on the interest that was imposed by banks and financial institutions.

So now the Government announced the waiver of COMPOUND interest during this moratorium period on your outstanding loans.

Now let us understand the eligibility for this Interest on interest waiver on loan moratorium.

·         This benefit is available for all those who availed of the moratorium or NOT. Hence, it is cheerful news for those who paid regular EMI and for also who opted for moratorium benefit during those 6 months.

·         Loan Types eligible for Loan Moratorium Interest Waiver Benefit

o   Home loans

o   Consumer durable loans

o   Educational loans

o   Auto loans

o   Personal loans

o   Professional and consumption related loans

o   MSME Loans

o   Credit card dues / EMIs converted through credit card dues

·     The maximum loan outstanding should be not more than Rs.2 Crore.

·     The loan should not be under NPA (Non-Performing Assets) with the bank as on 29th February 2020.

·     The loan should be active as on 29th February 2020.

·     Lenders may be private banks, public sector banks, co-operative banks or regional, rural banks, all India Financial Institutions, NBFCs or Housing Finance Company.

·     The computation of simple interest the amount would be based on the loan outstanding as on 29th February 2020.

·     As per this scheme, for these 6 months starting from 1st March 2020 to 31st August 2020, the simple interest is calculated on the outstanding principal as on 29th February 2020. The difference between the compound interest and simple interest will be credited back to the borrower.

·     This benefit is available for those who closed the loan during the moratorium period.

·     You will receive this benefit by 5th November 2020. Hence, if the amount is not credited, then approach the bank.

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Location: Delhi, India

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