The Finance Ministry has decided to credit any additional interest collected on loans between March 1st & Aug 31st, 2020. Read on for details.
Good news for borrowers! The Government has just announced that it will reverse any additional interest collected on loans between March 1st – Aug 31st, 2020. Here’s all you need to know!
Which Products Are Covered Under This Scheme?
This new scheme covers Home Loans, Personal Loans, Auto Loans, Credit Card dues, Education Loans, consumer durables as well as small & medium enterprise loans.
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What Are The Conditions Involved
This waiver will be applicable as long as the aggregate of all your outstanding loans does not exceed Rs. 2 crores.
Didn’t Apply For Moratorium?
Not an issue. This scheme is applicable to anyone who paid EMIs on time during the above-mentioned period. So, whether you availed moratorium or not, you can be sure to get any additional interest reversed to your account.
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How Is The Reversal/Credit Going To Be Executed?
Banks and NBFCs will first credit the respective loan accounts, following which the Government will reimburse the lenders accordingly.
When Is It Going To Be Done?
The additional interest on loans will be credited to your loan account by November 5th, 2020.
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What Does This “Additional Interest” Refer To?
Simply put, this refers to the difference amount between the compound interest and simple interest of the loan in question.
What Is The Objective Of the Move?
The aim is to bring some financial relief to borrowers amidst the COVID-19 pandemic.
- This scheme does not cover any additional interest charged on Credit Card dues as a result of late payment or any other fee that is a penalty.
- The rate of interest will be as mentioned in the loan agreement in the case of education, housing, auto, personal & consumption loans (as on February 29, 2020).
- In case of cash credit, simple interest shall be calculated on a daily basis as per the rate on February 29, 2020. Compound interest will be calculated on a monthly basis. The difference between the latter and the former will be credited to the customer’s loan account.
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