Home Loan / Personal Loan / Credit Card Borrowers to get CASHBACK on Paying EMI in Lockdown
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).
Eligibility criteria for ex-,gratia payment under the scheme are as follows:
(a) Borrowers in the following segments/classes of loans, who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs. 2 crore [aggregate of all facilities with lending institutions] as on 29.2.2020, shall be eligible under the Scheme:
- MSME loans
- Education loans
- Housing loans
- Consumer durable loans
- Credit card dues
- Automobile loans
- Personal loans to professionals
- Consumption loans
Any borrower whose aggregate of all facilities with lending institutions is more than Rs. 2 crore (sanctioned limits or outstanding amount) will not be eligible for ex-gratia payment under this scheme.
Other conditions for eligibility: Read Here
Benefit under the scheme
As per the policy decision of the Central Government, this scheme mandates ex-gratia payment to the classes of borrowers mentioned in clause 4 above by way of crediting the difference between simple interest and compound interest for a period between 1.3.2020 to 31.8.2020 by respective lending institutions mentioned in clause 3 above.
The lending institutions shall credit the difference between compound interest and simple interest with regard to the eligible borrowers mentioned in clause 4 above in respective accounts of such borrowers for the period to be reckoned, irrespective of whether such borrowers 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. BP.BC.47/21.04.048/2019-20, dated 27th March 2020 and extended on 23’d May 2020.
Rate of interest
(1) Education loans, Housing loans, Automobile loans, Personal loans to professionals, Consumption 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 in this respect.
(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. In cases where, no interest is being charged on Equated Monthly Instalments (EMI) for a specified period, for the purpose of ex-gratia payment, interest may be applied at the lender’s base rate / Marginal Cost of funds based Lending Rate (MCLR) whichever is applicable.
(3) Credit card dues — The rate of interest shall be the Weighted Average Lending Rate (WALR) charged by the card issuer for transactions financed on EMI basis from its customers during the period from 1,t March 2020 to 31st August 2020. The computation of the WALR shall be certified by the statutory auditor of the card issuer1.
(4) MSME 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 in respect of the term loan. 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.
(5) The rate of interest would be as prevailing on 29th February 2020, i.e., in case the rate of interest has changed thereafter, it shall not be reckoned for the purposes of this computation. Penal interest or penalty for late payment would not be reckoned as part of the contracted rate or WALR.
To Know claim process – Read Here
