The Finance Ministry has announced guidelines for waiver of interest which were paid by borrowers during period of loan moratorium, starting March -August this year. Last week, the Finance Ministry had released the guidelines where banks will pay interest on the interest that it received from borrowers during the moratorium. According to the guidelines, the banking company either be a public, co-operative, private or regional rural bank, will pay compound interest to borrower’s loan account notwithstanding whether it was fully, partially or not availed loan moratorium scheme.
The banks will pay the difference between the compound interest and simple interest to the borrower’s loan account for the 6 months between March-August 2020. This would be applicable on loans not exceeding Rs2cr. Loans like education loan, MSME loan, housing loans, credit card dues, consumer durable loans, auto loans, personal loans, corporate loans and consumption loans will be entitled for interest waiver scheme.
On the flip side of the announcement of guidelines for waiver of interest, banking stocks hit hard on Monday’s tradition session on Stock exchanges. During post lunch hours of trading session, it is observed that the Nifty Bank slipped 588 points and was trading at 23,889-level. The index has touched the day’s low of 23,867.75. At the same time, the Nifty PSU Bank traded at 1,306-mark down by 1 percent, and Nifty Pvt Bank was performing lower by 1.75pc. ICICI Bank took lead in the under-performing by trading at Rs402 per piece down 3.6 pc, followed by another major lender State bank of India at Rs196.15 per piece below 3.28 pc. Federal Bank, IDFC First Bank and Axis Bank also slipped by more or less 3 pc. Meanwhile, Bandhan Bank, HDFC Bank and RBL Bank plunged by 2% each.