Giving a sigh of a relief to borrowers during the festive season, the Centre on late Friday night announced waiver of interest on interest for loans up to Rs 2 crore irrespective of whether moratorium was availed or not, reported PTI.

The Department of Financial Services issued operational guidelines after the Supreme Court asked to implement the interest waiver scheme, which is likely to cost the exchequer Rs 6,500 crore.

The apex court, on October 14, had directed the Centre to implement interest waiver “as soon as possible” on loans of up to Rs 2 crore under the RBI moratorium scheme in view of the COVID-19 pandemic, saying the common man’s Diwali is in the government’s hands.

The scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020.

The guidelines said, “Borrowers who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs 2 crore (aggregate of all facilities with lending institutions) as on February 29 shall be eligible for the scheme.” 

“The accounts should not be Non-Performing Asset (NPA) as on February 28,” stated the guidelines.

According to the guidelines, housing loan, education loans, credit card dues, auto loans, MSME loans, consumer durable loans and consumption loans are covered.

As per the scheme, the lending institutions shall credit the difference between compound interest and simple interest with regard to the eligible borrowers in respective accounts for the said period irrespective of whether the borrower fully or partially availed the moratorium on repayment of loan announced by the RBI on March 27, 2020.

The scheme is also applicable on those who have not availed the moratorium scheme and continued with the repayment of loans.

The lending institutions after crediting the amount will claim the reimbursement from the central government. Hearing the matter on October 14, the Supreme Court observed that it was concerned about how the benefit of interest waiver would be given to borrowers and said the Centre has taken a “welcome decision” by taking note of plight of the common man, but authorities have not issued any order in this regard.

“Something concrete has to be done,” a bench headed by Justice Ashok Bhushan had said, adding, “Benefits of waivers to borrowers up to Rs 2 crore must be implemented as soon as possible.” The top court, which posted the matter for hearing on November 2, told the advocates appearing for the Centre and banks that “Diwali is in your hand”.

The Centre recently told the apex court that going any further than the fiscal policy decisions already taken, such as waiver of compound interest charged on loans of up to Rs 2 crore for six months moratorium period, may be “detrimental” to the overall economic scenario, the national economy and banks may not take “inevitable financial constraints”.

The top court is hearing a batch of petitions which have raised issues concerning the six-month loan moratorium period announced due to the COVID-19 pandemic.

The bench, also comprising Justices R S Reddy and M R Shah, said when authorities have decided something then it has to be implemented.