According to this guideline of the Department of Financial Services of the Ministry of Finance, on the loan account up to Rs 2 crore, creditors will be given relief of interest waiver on interest. The borrower will credit the difference between cumulative interest and simple interest to the eligible loan account. This amount will be for the period of loan moratorium between March 1, 2020 to August 31, 2020. After crediting this amount in the loan account, the borrowers will have a chance to claim it from the government till 15 December 2020 to make up for it.
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To whom will this scheme apply?This central government scheme will be applicable to all lending institutions. This includes all public and private banks, non-banking financial institutions (NBFCs), housing finance companies, cooperative banks, regional rural banks, all-India financial institutions and the National Housing Bank.
Who will get the benefit of this scheme?
Creditors who have taken loans up to Rs 2 crore on or before 29 February 2020 will be eligible for this scheme. Information about this has been given in a letter issued by the Finance Ministry. For this a condition will also be that loan account should be standard by 29 February 2020. This means that this loan should not be in the category of non-performing asset ie NPA.
What will be the benefit even if the loan Moratorium is not availed?
After taking the Loan Moratorium, the amount that the bank was charging you as ‘interest on interest’ will be reduced from your EMI. Even if you have not taken advantage of Loan Moratorium.
For how long will the interest be waived on interest?
The loan will be applicable from 1 March 2020 to 31 August 2020.
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For which types of loans, will the decision on the “Interest on Interest” waiver be applicable?
Total 8 types of loans will be applicable: MSME loan, Education loan, Housing loan, Consumer durables loan, Credit card dues, Automobile loan, Personal loan given to professionals and consumption loan.
If the loan account is closed during March 1, 2020 to August 31, 2020, what will be the benefit?
Yes, the interest on which you have paid interest will be refunded in the period from 1st March 2020 till the loan account is closed.
How long will the banks give the interest waiver amount on interest.
By 5 November 2020, the interest forgiveness money will be credited on the interest in the account of all the borrower.
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Will the NPA apply to the Loan Account?
If the loan account is NPA on or before February 29, 2020, then interest on interest will not be forgiven.