Interest-on-interest waiver: During the Corona epidemic, the beneficiaries who took the benefit of loan moratorium are now being given interest exemption on interest ie compound interest. The Finance Ministry has released the details about the kind of loan on which the loan holders will get the benefit of interest waiver scheme. Under this, the Ministry has made it clear that the interest of interest-on-interest forgiveness scheme will not be available for the loans of agriculture and allied activities.
The Finance Ministry has released additional FAQs (Frequently Asked Questions) on the ‘Grace Relief Payment Scheme’ related to the payment of the difference between ‘Compound and Simple Interest’. The Finance Ministry said that the borrowers will also get the benefit of this scheme for arrears on credit cards till 29 February. The FAQ states that the benchmark rate for this relief will be the contract rate, which is used for EMI loans on behalf of the credit card issuer.
8 sectors included in the plan
The Finance Ministry clarified that a total of eight areas fall under this scheme. Crop and tractor loan comes under agriculture and allied activities which are not included in this scheme. The Reserve Bank of India (RBI) had asked all lending institutions on Tuesday to implement the Interest Waiver Scheme on recently announced interest for loans up to Rs 2 crore. Under this scheme, the interest on interest on loans up to two crore rupees will be waived for six months from March 1, 2020.
The government last Friday announced a grace or grant for six months to pay the difference between compound interest and simple interest for the eligible loan account. The government had asked all banks to deposit the difference between compound interest and simple interest till November 5 in the account of the borrowers.