Following the announcement of the lockdown, the government will waive compound interest on those who have taken loans between March 1, 2020 and August 31, 2020.
Central govt approves scheme for grant of ex-gratia payment of difference between compound interest & simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020). Benefits to be routed through lending institutions, as per eligibility criteria.
The central government has taken a big step to get the market back on track due to the Corona epidemic and lockdown. The Modi government issued a circular on Saturday
“Those who have taken loans of up to Rs 2 crore from national banks or other financial institutions like NBFCs,” he said. Their lockdown time i.e. total compound interest of 6 months will be waived.
This means that after the announcement of the lockdown, between March 1, 2020 and August 31, 2020, the government will waive the compound interest on those who have taken out a loan. That is, if a customer feels compounded interest instead of normal interest due to non-payment of the loan, the government will reimburse him.
The Reserve Bank had earlier asked banks to pay interest rates. So that they can avoid the burden of paying interest during the time of the epidemic, now this decision of the central government has become a big relief for small and medium enterprises and individual loan takers. What is a government announcement
The government said in a circular that all banks
would now pay the gap between compound interest and normal interest charged to debtors.
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I.e. those who have paid compound interest by the banks during the lockdown. They will get their distance back. So those who have not paid interest during the meratorium will have to pay only modest interest.