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According to 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 scheme will be implemented by November 5, and the relief on compound interest will be applicable to standard accounts as on February 29, 2020, according to the official notification. Lenders will have to claim reimbursement from the government by December 15.
The rate of interest would be reckoned as the rate in the loan agreement, the notification said. Any change in the rate after February 29 will not be reckoned for the scheme.
The scheme is meant for personal and MSME or micro, small and medium enterprises loans up to Rs 2 crore as well as credit card dues. Housing, education, automobiles and consumer durables loans are also covered in the scheme.
The Centre will have to shell out Rs 6,500 crore for the implementation of the scheme, news agency Reuters reported, citing government officials.
On October 14, the Supreme Court had directed the government to implement the interest waiver on loans of up to Rs 2 crore under the Reserve Bank of India's moratorium scheme "as soon as possible" in view of the COVID-19 pandemic.
Any delay in implementing a waiver on "interest on interest" on loans up to Rs 2 crore is not in the interest of the common man, the bench - comprising Justices Ashok Bhushan, R Subhash Reddy and MR Shah - had said. (Also Read: "Common Man's Diwali...": Top Court Nudge For Loan Relief By November 2)
The government was forced to rethink the loan moratorium scheme which allowed borrowers to not pay loan instalments between March and August, but allowed lenders to accrue additional interest on the unpaid sum.
The Supreme Court has listed the matter for hearing on November 2. The top court is hearing a batch of petitions which have raised issues concerning the six-month loan moratorium period announced by the RBI in order to support borrowers against the COVID-19 pandemic.
In March, the RBI had granted borrowers an option to delay their EMIs for six months, till August 31, as the coronavirus pandemic-related restrictions caused a record 23.9 per cent contraction in the economy in the quarter ended June 30. The central bank and the government have already told the top court that the moratorium can be extended by up to two years.