The government has announced guidelines for the waiver of compound interest that was payable by borrowers who had opted for moratorium on their loan equated monthly instalments (EMI) between March 1, 2020 and August 31, 2020.
In this article, we have tried to cover all important points about interest rate waiver viz who is eligible, amount of waiver, types of loans covered, time limit till when this benefit shall be credited to the borrowers account etc to enable the borrowers know about their all rights about interest waiver.
More importantly this is available even if the moratorium is not obtained.
Who are eligible?
All borrowers whose loan amount does not exceed Rs 2 crore – aggregate of all the facilities from the lending institutions.
The loan account should be standard account as on February 29, 2020
Types of loan covered?
MSME loans, Education loan, Housing loans, Consumer durable loans, Credit card dues, Automobile loans, Personal loans to professional & Consumption loans.
Loans should be availed from?
The lending institution should be either: Banking company, Public sector bank, Co-operative bank or Regional rural bank, All India Financial Institution, Non-Banking Financial Company or Housing Finance Company.
I did not opt for moratorium, am I covered to this benefit?
The payment will be made to the borrower’s loan account irrespective of whether the borrower has fully availed, partially availed or not availed the moratorium. Thus, even if you have not opted for the moratorium, then also you are eligible under the scheme
Amount of benefit
Under the scheme, the difference between the compound interest and simple interest will be credited to the borrower’s loan account for the period between March 1, 2020 and August 31, 2020
By when I shall get the amount of this benefit?
The lending institution is required to credit the amount to the borrower’s account by November 5, 2020.
Illustration:
| Principal Amount | 85,00,000 | 1,05,00,000 | 1,80,00,000 |
| Interest Rate | 13.50% | 13.50% | 13.50% |
| Int for 6-month moratorium with compound interest(A) | 5,90,130 | 7,28,984 | 12,49,688 |
| Int for 6-month moratorium with Simple interest(B) | 5,73,750 | 7,08,750 | 12,15,000 |
| Net Refund | 16,380 | 20,234 | 34,688 |
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