The Reserve Bank of India (RBI)  on Tuesday asked all lending institutions, including non-banking financial companies, to implement the waiver of interest on interest for loans up to Rs 2 crore for the 6 months moratorium period starting March 1, 2020. On October 23, the govt had announced the scheme for grant of ex-gratia payment of difference between compound interest and simple interest for 6 months to borrowers in specified loan accounts. The scheme commands ex-gratia payment to certain categories of borrowers as per crediting the difference between simple interest and compound interest for the period between March 1, 2020 to August 31, 2020 by respective lending institutions. The govt had asked the lending institutions to complete the exercise of crediting the amount in the accounts of borrowers by November 5.

The finance ministry had issued the operational guidelines in the backdrop of the Supreme Court's direction to implement the interest waiver scheme. The Supreme  court on October 14, directed the Centre to implement as soon as possible interest waiver on loans of up to Rs 2 crore under the RBI moratorium scheme in view of the COVID-19 pandemic saying the common man's Diwali is in the government's hands. Housing loans, 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 pertaining 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 lending institutions after crediting the amount will claim the reimbursement from the central government.

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