As a major Diwali gift to borrowers, the Finance Ministry has approved guidelines for a scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months of loans up to Rs.2 crore. 

As per the operational guidelines issued by Department of Financial Services, the scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020.

"Borrowers who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs 2 crore (aggregate of all facilities with lending institutions) as on February 29 shall be eligible for the scheme," it said.

Housing loan, education loans, credit card dues, auto loans, MSME loans, consumer durable loans and consumption loans are covered under the scheme.

As per the scheme, the lending institutions shall credit the difference between compound interest and simple interest with regard to the eligible borrowers in respective accounts for the said period irrespective of whether the borrower fully or partially availed the moratorium on repayment of loan announced by the RBI on March 27, 2020.

The scheme is applicable on those who have not availed the moratorium scheme and continued with the repayment of loans.

The lending institutions after crediting the amount will claim the reimbursement from the central government.

According to sources, the government will have to shell out Rs 6,500 crore for the implementation of the scheme.

As a major Diwali gift to borrowers, the Finance Ministry has approved guidelines for a scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months of loans up to Rs.2 crore. 

As per the operational guidelines issued by Department of Financial Services, the scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020.

"Borrowers who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs 2 crore (aggregate of all facilities with lending institutions) as on February 29 shall be eligible for the scheme," it said.

Housing loan, education loans, credit card dues, auto loans, MSME loans, consumer durable loans and consumption loans are covered under the scheme.

As per the scheme, the lending institutions shall credit the difference between compound interest and simple interest with regard to the eligible borrowers in respective accounts for the said period irrespective of whether the borrower fully or partially availed the moratorium on repayment of loan announced by the RBI on March 27, 2020.

The scheme is applicable on those who have not availed the moratorium scheme and continued with the repayment of loans.

The lending institutions after crediting the amount will claim the reimbursement from the central government.

According to sources, the government will have to shell out Rs 6,500 crore for the implementation of the scheme.