How will the interest be calculated for cash credit/ overdraft accounts? 6. 8. Earlier this month, in the matter of interest relief to borrowers during the moratorium, the Centre had promised to make good the interest on interest. Govt's ex-gratia payment of interest on interest to cover 75% borrowers The tab that the government will pick-up for such concession is estimated at about Rs 7,500 crore, according to CRISIL's analysis. This will make the approach uniform for all borrowers, irrespective of whether they have fully availed or partially availed or not availed of the moratorium on repayment of the respective loans as announced by the RBI vide its circular DOR. BP.BC.47/21.04.048/2019-20, dated 27th March 2020 and extended on 23rd May 2020. 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Any debits / credits which are not reflected in the account will not be eligible/ will be excluded. Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. The rate of interest would be as prevailing on 29.2.2020, i.e., in case the rate of interest has changed thereafter, it shall not be reckoned for the purposes of this computation. 7. 3. All Housing Finance Companies (I IPCs) registered with the National Housing Bank (NHB) [through the supervisor of HFCs (National Housing Bank)], Subject: Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020). Credit card interest waiver In the case of credit card dues, the interest rate will be the weighted average lending rate (WALR) charged. No Interest Rebate on Credit Card During the hearing in the Supreme Court, Tushar Mehta, who is appearing for the Central Government, said that the credit card user will also get ‘Ex-Gratia’. What are the main features of the ex gratia to borrowers scheme? While the waiver will offer a modicum of relief in terms of cash flows, repayment discipline among borrowers after the moratorium ended – and thus medium-term delinquencies at banks and NBFCs – will bear watching, it added. For accounts closed during the said period, the period for crediting would be from 1st March 2020 and restricted to the date of closure of such account. ... it said. SBI shall evaluate the claims to ensure that they are in conformity with this scheme's guidelines, and shall furnish to the Central Government statements of claims found eligible and claims settled. (3) Grievances, if any, of the lending institutions shall be resolved through the designated cell at the State Bank of India in consultation with the Ministry of Finance, Government of India. The period to be reckoned for crediting of difference between compound interest and simple interest … 12. I got it for all my secondary cards - ICICI, Amex but not on my primary HDFC DB card. Individual loans from the eight eligible categories of borrowers, including those categorised as Micro, Small and Medium Enterprises (MSME) by the lending institution, are covered under the scheme irrespective of the nature of guarantee. Whether Accounts categorised as SMA-0, SMA-1 and SMA-2 are eligible to avail the benefit of the package? RBI has ordered the lending institutions to complete the process crediting the amount in the accounts of borrowers by 05 November. Digital Editor. The government’s decision to bear the cost of waiver on small-borrower loans has come as a relief to lenders. Last Updated at October 26, 2020 18:07 IST. The benchmarks and modalities for ex-gratia payment of difference between compound interest and simple interest under the scheme would be as detailed in the attached operational guidelines. BP.BC.47/21.04.048/2019-20, dated 27.3.2020 and extended on 23.5.2020. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. Business Standard is happy to inform you of the launch of "Business Standard Premium Services". The main features / highlights of the scheme are as under: a. The details of the Scheme are available at: https://financialservices.gov.in/sites/default/files/Scheme%20Letter.pdf. SBI is advised to appropriately equip its designated officer(s) / cell for processing such claims in a timely manner, and to notify details of the same on its website. Consequently, borrowers of unsecured, micro and gold loans will benefit more than those who had taken home loans, CRISIL said.document.write("");googletag.cmd.push(function(){googletag.defineOutOfPageSlot('/6516239/outofpage_1x1_desktop','div-gpt-ad-1490771277198-0').addService(googletag.pubads());googletag.pubads().enableSyncRendering();googletag.enableServices();}); The tab that the government will pick-up for such concession is estimated at about Rs 7,500 crore, according to CRISIL’s analysis. 2. 3. on October 23, 2020, which mandates ex-gratia payment to certain categories of borrowers by way of crediting the difference between simple interest and compound interest for the period between March 1, 2020 to August 31, 2020 by respective lending institutions. Get all latest content delivered straight to your inbox. (b) The aforesaid eligibility shall be subject to the following further conditions and stipulations: (i) Account should be standard as on 29.2.2020, i.e., loan should not be a Non-Performing Asset (NPA) as on 29.2.2020. The computation of the WALR shall be certified by the statutory auditor of the card issuers, The outstanding in the account as at end of 29.2.2020 will be the reference amount for Term Loans on which the interest (simple as well as compound) will be calculated. Credit card dues 6. We, however, have a request. 3. All lending institutions are advised to be guided by the provisions of the Scheme and take necessary action within the stipulated timeline. Will I also be eligible for Ex-Gratia interest refund? (1) Borrowers in the following segments/classes of loans, who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs. The Ex-Gratia Payment Scheme is the payment of the difference between the Compound Interest and the Simple Interest for six months ending 31 August 2021 to borrowers in specified loan accounts. Credit card dues outstanding as on 29.2.2020 would be considered for giving relief to the borrowers and the benchmark rate applicable for such relief would be the contract rate (WALR), as on 29.2.2020, which is used by the credit card issuers for the purpose of EMI loans. 4. The lending institutions have been asked to complete the exercise of crediting the amount in the accounts of borrowers by November 5. 2 crores (aggregate of all the borrowings / facilities from all the banks and financial Institutions) for the period from 1st March 2020 to 31st August 2020 (6 months / 184 days). Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance. This could have posed significant challenges for the government as well as the financial sector. CRISIL in a statement, said the cost to the exchequer would have halved if the waiver was allowed only where moratorium was availed of. No. Topics 2 crore [aggregate of all facilities with lending institutions] as on 29.2.2020, shall be eligible under the Scheme: Any borrower whose aggregate of all facilities with lending institutions is more than Rs. While making the calculation repayments in the loan account during the period to be reckoned will be ignored. Eligibility: The Credit Card outstanding (i.e. Chief Executive, Indian Banks' Association, 5. BP.BC.47/21.04.048/2019-20 dated 27.03.2020 and extended on 23.05.2020. 13. 2. This will make the approach of the lending institutions uniform for all borrowers, irrespective of whether they have fully availed or partially availed or not availed of the moratorium on repayment of the respective loans as announced by the RBI vide its circular DOR.No. (2) Consumer durable loans — The rate of interest to be applied for calculating the difference between simple and compound interest shall be the contracted rate as specified in loan agreement/ documentation. From a borrower’s perspective, the benefit would be relatively higher for those who had availed of higher-yielding loans. For cash credit (CC) / overdraft (OD), while the contracted rate of interest would similarly apply, the basis of calculation for simple and compound interest would differ as explained below. What is Seventh proviso to section 139(1), Is ITR and Tax Audit Due Date Extended till 31.03.2021, Is there any Extension to TDS Return Due Date For Quarter 1 FY 2020-21, A Guide to Depreciation Rates as per Income Tax for AY 2020-21. Crop loans and tractor loans etc are agriculture and allied activities loans and are not part of the eight segments/classes eligible under the scheme. How will the lending institution assess whether a borrower has aggregate loan facilities upto Rs.2.00 cr from the banking system? An ex gratia payment is made to an individual by an organization, government, or insurer for damages or claims, but it does not require the admittance of liability by the party making the payment. 7. (ii) Compound interest will be calculated for the period at the rate of interest as on 29.2.2020 and compounding will be done on monthly rests. It will be credited to your savings/ current account and if you do not maintain any such account with the lending institution, you can advise the lending institution the details of the account in other banks where the amount can be credited /remitted to. Yes. In view of the unprecedented and extreme COVID-19 situation, the object of the Scheme is to provide ex-gratia payment of difference between compound interest and simple interest by ways of relief for the period from 1st March 2020 to 31st August 2020 to borrowers in specified loan accounts. I have not taken Moratorium. (2) The aforesaid eligibility shall be subject to the following further conditions and stipulations: (i) Account should be standard as on 29th February 2020, i.e., loan should not be a Non-Performing Asset (NPA) as on 29th February 2020. Ideals stronger 29th Feb 2020 are eligible to avail the benefit of lending! Rate of interest would the outstanding as on 29th February 2020 exercise of the... 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