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Govt. issues directions for Interest Waiver: Scheme for grant of ex-gratia payment [Read Letter]

government - Interest Waiver - grant of ex-gratia payment - ex-gratia payment - Taxscan

The Government has notified the Scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers in specified loan accounts from March 1, 2020, to August 31, 2020.

The government directed all the nationalized bank to convey that in view of the unprecedented and extreme COVID-19 situation, the Central Government has approved “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)”.

Benefits under the scheme would be routed through lending institutions.

The government further notified the eligibility criteria for ex-gratia payment under the scheme.

The borrowers of MSME loans, Education loans, Housing loans, Consumer durable loans, Credit card dues, Automobile Loans, Personal loans to professionals, Consumption loans and who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs. 2 crore as on February 29, 2020, shall be eligible under the Scheme.

The scheme letter notified various conditions to avail of the benefit under the scheme.

Firstly, the Account should be standard as of February 29, 2020, i.e., the loan should not be a Non-Performing Asset (NPA) as on February 29, 2020.

Secondly, a lending institution must be either a banking company, or a Public Sector Bank, or a Co-operative Bank or a Regional Rural Bank, or an All India Financial Institution, or a Non-Banking Financial Company or a Housing Finance Company registered with RBI or National Housing Bank as the case may be. A Non-Banking Financial Company, Micro Finance Institution should be a member of a Self-Regulatory Organisation (SRO) recognized by RBI.

Thirdly, the ex-gratia payment under this scheme shall be admissible irrespective of whether the borrower in sub-clause (1) had fully availed or partially availed or not availed of the moratorium on repayment announced by RBI vide its circular DOR.No. BP.BC.47/21.04.048/ 2019-20, dated 27.3.2020 and extended on 23.5.2020.

“Issues and concerns relating to claims submitted by the lending institutions shall be handled through the designated cell at SBI in consultation with the Government of India. Each lending institution shall put in place a grievance redressal mechanism for the eligible borrowers for redressal of their grievances arising out of the present scheme within one week from the date of issuance of these scheme guidelines, at an appropriate level(s). While putting in place such grievance redressal mechanism, lending institutions can keep in mind the communication dated 1.10.2020 issued by the Indian Banks’ Association in respect of resolution framework for COVID- 19 related stress for guidance. Grievances, if any, of the lending institutions shall be resolved through the designated cell at SBI in consultation with the Ministry of Finance, Government of India,” the government said.

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