MUMBAI: In the next few days, banks will credit lakhs of loan accounts with an ex-gratia payment equal to the interest on interest amount they have paid during the lockdown. The Indian Banks Association has said that the government’s decision to apply a uniform formula for all borrowers below Rs 2 crore will enable them to automate the payments within the government deadline of November 5, 2020.
“This is a very straightforward scheme. The outstanding balance has been crystallised as on February 29. Also, any recoveries by the bank during the moratorium period are ignored. A borrower who has paid every single instalment will get the same benefit as those who have availed of moratorium. Calculations will not take time as it will be software-driven. However, eligible customers will have to be certified by auditors (that the loans are eligible),” Rajkiran Rai, IBA chairman and MD of Union Bank of India, said.
TOI had in its Saturday edition reported exclusively on the government finalising the scheme.
Banks are expected to put in place a portal on their website for redressal of any grievance regarding the ex-gratia payment. In the meantime, they will continue to charge interest in their regular manner. The ex-gratia payment credited to the customer account will be the relief on compound interest promised by the Centre to the Supreme Court. Earlier this month, in the matter of interest relief to borrowers during the moratorium, the Centre had promised to make good the interest on interest.
The promise was followed by a communication on Friday to all RBI-regulated lenders announcing the scheme where the government would compensate banks for crediting customers’ accounts with an ex-gratia amount equal to interest on interest on loans during the lockdown.
The government is expected to come back with a clarification on the eligibility of credit card outstandings as on February 29, and whether ex-gratia on credit card will be available on outstanding as on that date or on the amount rolled over. Another issue relates to accounts where the loan tenure was completed mid-lockdown and the borrower was no longer with the bank.
Of the Rs 100 lakh crore of loans outstanding, the eligible loans are expected to be in the range of Rs 30-40 lakh crore. Assuming a rate of 8%, the interest on the loans would be roughly Rs 5,000 to Rs 6,500 crore.
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October 25, 2020 at 03:35AM
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Relief on interest will flow to borrowers’ accounts as ex gratia - Times of India
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