The Reserve Bank of India (RBI) on Tuesday asked all lending agencies, comprising non-banking financial companies, to enforce the waiver of interest on interest for loans up to Rs 2 crore for the duration of six-month moratorium period beginning March 1, 2020.
The Centre had on October 23 announced the scheme for grant of ex-gratia payment of variance between simple and compound interest for six months to borrowers in certain loan accounts.
The scheme authorises ex-gratia payment to a specific class of borrowers by way of crediting the difference between simple and compound interest for the period between March 1, 2020, and August 31, 2020, by respective credit establishments.
The government had asked these facilities to complete the exercise of crediting the amount in the accounts of borrowers by November 5.
"All lending institutions are advised to be guided by the provisions of the Scheme and take necessary action within the stipulated timeline," the RBI said in a notification.
The finance ministry had issued the operational guidelines in the backdrop of the Supreme Court's direction to implement the interest waiver scheme.
The apex court had, on October 14, directed the Centre to implement "as soon as possible" interest waiver on loans of up to Rs 2 crore under the RBI moratorium scheme in view of the COVID-19 pandemic saying the common man's Diwali is in the government's hands.
Housing loans, education loans, credit card dues, auto loans, MSME loans, consumer durable loans, and consumer loans are covered under the scheme.
As per the scheme, the lending institutions shall credit the difference between compound interest and simple interest with regard to the eligible borrowers in their respective accounts for the said period irrespective of whether the borrower fully or partially availed of the moratorium on repayment of loan announced by the RBI on March 27, 2020.
The scheme is also applicable to those who have not availed of the moratorium scheme and continued with the repayment of loans.
The lending institutions, after crediting the amount, will claim reimbursement from the central government.
The RBI had announced a moratorium on repayment of debt for six months beginning March 1, 2020, to help businesses and individuals tide over their financial problems on account of disruption in normal business activities.
(With inputs from PTI.)