The Union Cabinet led by Prime Minister Narendra Modi on Wednesday approved a scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers in specified loan accounts with an aim to help small borrowers bear the stress on account of the pandemic and get back on their feet.
According to a press release by the Cabinet, the cabinet approved the payment of the ex-gratia amount of Rs. 973.74 crore pertaining to remaining claims submitted by Lending Institutions (LIs) under Scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers in specified loan accounts from March 1, 2020, to August 31, 2020.
"By granting ex-gratia payment of the difference between compound interest and simple interest during the six-month moratorium period to distressed/vulnerable category of borrowers, irrespective of whether the borrower had availed of moratorium or not, the scheme would equitably help small borrowers bear the stress on account of the pandemic and get back on their feet," said the release.
In the context of the COVID-19 pandemic, "Scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers in specified loan accounts from March 1, 2020, to August 31, 2020" was approved by the Cabinet in October 2020, envisaging therein an outlay of Rs. 5,500 crore.
The category of borrowers eligible for ex-gratia payment under the scheme include MSME loans up to Rs 2 crore, education loans up to Rs. 2 crore, housing loans up to Rs. 2 crore, consumer durable loans up to Rs. 2 crore, auto loans up to Rs. 2 crore, personal loans to professionals up to Rs. 2 crore and consumption loans up to Rs. 2 crore, according to the press release.
( With inputs from ANI )
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