Recently, the finance ministry issued several guidelines for a scheme that is based on granting of ex-gratia payments (Ex Gratia payments basically means payments that are made by the government or any organization to an individual due to damages or certain claims. However, this payment is voluntary as the party isn’t under any compulsion to make the payment) which considers the difference between the simple interest and compound interest to specific borrowers of particular loan accounts from the time period of March 1 to August 31.
In its circular the Finance Ministry mentioned that the benefit provided will be given through the lending institutions, thus addressing to the banks and the other lending institutions in the country. It clarified saying that the lending institute can be either a bank, co-operative, regional rural bank, a financial institution which is non-banking or it can also be any micro finance institute in the country.
Further, it added that the amount has to be credited in the borrower’s account by the lender on 5 November, or before that. Thus, this initiative will provide relief to the borrowers during Diwali and the lenders will be claiming the reimbursement by December 15.
The benefit isn’t confined to personal loans but also professional loans, educational loans, dues in credit cards, housing loans, loans that are taken by Micro, medium and small enterprises and the loans for consumption. Moreover, it has been mentioned that the loans shouldn’t be non-performing assets as of February 29 and this amount cannot cross two crores. Thus, the circular said that if a borrower’s total facilities with the lending institutions is more than two crores, they will not fall under the scheme of ex-gratia payment.