A somewhat dramatically serendipitous series of event with a multitude of stakeholders including and up to the apex Court of India seems to reach a favorable conclusion in the near future.
Owing to the pandemic induced lockdown, the RBI had imposed a moratorium on all loans for three month period starting March, 2020. However, the Supreme Court taking cognizance of the issue later extended it for six months (till August). The Supreme Court also directed the government to expedite its decision to waive of “interest on interest” for all loans under Rs. 2 Crore for select categories.
“The Central Government has directed that all lending institutions shall give effect to the scheme and credit the amount calculated as per the scheme into the accounts of the borrowers by November 5,” the Ministry of Finance said in an affidavit in court.
All lending institutions shall credit the difference between compound interest and simple interest on loans in the respective accounts of eligible borrowers for the period between March 1 and August 31, the affidavit stated.
“The amount shall be credited by each of the lending institutions irrespective of whether such eligible borrowers have fully availed or partially availed or have not availed of the moratorium/deferment in payment of installments as par the circulars dated March 27 and May 23 issued by the RBI,” the affidavit explained.
The loan categories that fall under this are- Education, MSME, Housing, Consumer Durables, Credit Card, Auto, Consumption Loan and Personal Loan.
All Financial Institutions including banking companies, public sector banks, cooperative banks, regional rural banks, all India financial institutions, non-banking financial companies, housing finance companies registered with RBI and national housing banks.