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RBI issues direction for ex-gratia payment of interest on interest to banks

FinMin last week had approved guidelines for a scheme for grant of ex-gratia payment

Reserve Bank of India issued direction on Tuesday to all lending institutions to implement provisions of Scheme for grant of ex-gratia payment of difference between compound and simple interest for six months to borrowers in specified loan accounts (1 March to 31 Aug) and take necessary action within stipulated time.

In a festival gift to borrowers, the Finance Ministry last week had approved guidelines for the same scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months of loans up to 2 crore.

The guidelines came after the Supreme Court directed the Centre to implement "as soon as possible" interest waiver on loans of up to 2 crore under the RBI moratorium scheme in view of the COVID-19 pandemic.

As per the operational guidelines issued by Department of Financial Services, the scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020.

The lender will have to credit the amount to the account of borrower on or before 5 November, giving relief to borrowers ahead of Diwali. Thereafter, lender can claim reimbursement from the govt by December 15.

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