Supreme Court: Centre informs, "Banks to Credit Compound Interest Collected"
On 26th October, Monday the centre informed the Supreme Court that by 5th November lending institutions must implement the credit into the accounts of borrowers who had borrowed loans up to an amount Rs. 2 core.
The compound interest collected during the tenure of six-month loan repayment moratorium period and then claims reimbursement from the Union Government. "The Central Government has directed that all lending institutions shall give effect to the scheme and credit the (compound interest) amount calculated as per the scheme in the respective accounts of borrowers by November 5," it was stated through an affidavit by the Finance Minister.
The Supreme Court had inquired the government to elucidate the mechanism to through which the implementation of its decision to waive interest on interest for the six-month moratorium period for those individuals who had borrowed amounting up to Rs 2 core, including the MSMEs.
The Centre in its reply had stated that the benefit would be available to those who had benefitted from the moratorium and had paid their installments or had partially availed the benefits. The Ministry quoted that, "Under the scheme, all lending institutions shall credit the difference between compound interest and simple interest in the respective accounts of eligible borrowers for the period between March 1 and August 31"
The ministry said this resolution has been taken after "careful consideration, keeping in the mind the overall economic scenario, the nature of borrowers, impact on the economy and such other factors as a policy decision earmarking the stipulated class of borrowers for grant of benefits."
It further stated, "After crediting the said amount in the respective accounts of eligible borrowers, the lending institutions would claim reimbursement from the central government through nodal agency of State Bank of India as stipulated under the scheme."
The amount shall be credited by each of the lending institutions under the scheme irrespective of whether such eligible borrowers have fully availed, or partially availed, or partially availed or have not availed of the moratorium, which is deferment in payment of installments.