In a bid to help borrowers during the outbreak of coronavirus, the government on Friday informed of implementing a loan relief scheme by November 5 and would reimburse the interest that was applicable to eligible loan repayments due between March and August.
In guidelines on the loan relief released on Wednesday, the Department of Financial Services said, “the relief will be available to the borrowers regardless of whether they opted to defer their EMIs, either fully or partially”.
The order further stated lending institutions will first credit the amount – the difference between compound interest and simple interest for the six-month period – on eligible loans up to rupees 2 crore, which will be reimbursed by the government as part of the scheme.
According to a PTI report, the government will be spending 6,500 crore for the implementation of the scheme.
Highlights of the guidelines:
- The scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020.
- The relief on compound interest will be applicable to standard accounts on February 29, 2020, and the scheme will be implemented by November 5.
- The rate of interest would be reckoned as the rate in the loan agreement. Any change in the rate after February 29 will not be reckoned for the scheme.
- The scheme is meant for personal and MSME or micro, small and medium enterprises loans up to rupees 2 crore as well as credit card dues. Housing, education, automobiles and consumer durables loans are also covered in the scheme.