Home >Money >Personal Finance >Interest waiver: Opted for loan moratorium but have not received any cashback. Here's why
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The companies raised money for funding expansion plans, retiring debt, supporting working capital requirements and other general corporate purposes.

Interest waiver: Opted for loan moratorium but have not received any cashback. Here's why

  • The Reserve Bank of India offered six months’ moratorium to borrowers in the wake of financial stress amid COVID-19
  • Any borrower who has maintained their account in standard state and has been making timely payment pre-COVID-19 is eligible for this credit

The banks rolled out the 'interest on interest' charged from the customers on loans and credit cards during the moratorium period, to the borrowers in the first week of this month. The individual borrowers and small businesses with loans of up to 2 crore are eligible for the cashback. You have applied for loan moratorium but have not received ex-gratia money yet? Here's why

What is interest waiver scheme?

The Reserve Bank of India offered six months’ moratorium — from 1 March to 31 August — to borrowers in the wake of financial stress amid COVID-19. The central government agreed to pay the 'difference between compound and simple interest to borrowers of specified loan accounts’ from 1 March to 31 August'. The benefits have been extended to 1) Micro, small and medium enterprises (MSMEs) loans, 2) Education loans, 3) Housing loans, 4) Consumer durables loans, 5) Credit card dues, 6) Auto loans, 7) Personal and professional, 8) Consumption loans.

Loan accounts should be standard in the books of the lending institutions as on cut off date of 29 February, 2020 to avail the ex-gratia payment. The period reckoned for refund shall be from 1 March to 21 August, 2020, that is six months period or 184 days, the finance ministry said.

Any borrower who has maintained their account in standard state and has been making timely payment pre-COVID-19 is eligible for this credit.

"Banks are expected to send an SMS to the concerned borrower on their mobile number that is registered with the bank. It will give them an idea of the refund or cashback they will receive," said Nityanand Sharma, co-founder & CEO, Simpl Technologies.

If borrower has availed loan moratorium

For the customers who opted into moratorium, they will be just required to pay the simple interest in their outstanding and any compounded interest will be waived by the financial institution. However, considering the borrower had not made any repayments, they will not be eligible for any cashback, said Anil Pinapala, CEO, Vivifi Finace India Pvt limited.

If borrower has not availed the loan moratorium

"So this measure is being implemented in a fashion that it is uniformly applicable to all borrowers and doesn’t put the good paying customers at any disadvantage and this particular aspect has to be highly appreciated. The government's measure to make good of this loss to the banks will be greatly appreciated by consumers and the institutions," Pinapala explained.

The banks have already credited the borrower and the cashback will reflect in the borrower’s account.

If borrower repaid the loan during moratorium period

Even if the borrower repaid the loan during moratorium period, he or she will applicable for the ex-gratia payment. The 'interest on interest' will be waived and credited to the borrower’s account, for the months that the borrower has made payments, Pinapala said.

"Borrowers that made the repayments with or without having taken a moratorium should look for the refund by reaching out to their bank or NBFC representatives," Rohit Garg, co-founder and CEO, SmartCoin said.

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