The Central Government, after being questioned by the Supreme Court, has announced that the scheme formulated for granting ex-gratia payment of difference between compound interest and simple interest for six months to borrow on specific loan accounts will be modularized by the 5th of November 2020. Aforesaid decision was taken by the Ministry of Finance, Government of India and has been approved by the Union Cabinet vide meeting held on 21.10.2020. The decision was taken in the wake of the unprecedented COVID-19 situations in the country.
The primary object of the scheme is to waive the compound interest applicable on all the loans sanctioned between the period of 1st March 2020 to 31st August 2020 for the benefit of certain designated class of borrowers. The clause 3 of the scheme provides for eight categories of borrowers who are eligible to be credited, the difference between compound interest and simple interest of their respective loan amounts. Eligible borrowers under this scheme will be benefited irrespective of whether they had availed the moratorium or not. This decision does not give rise to any contractual, legal or equitable liability of the Central Government.
The Scheme also lays down a grievance redressal mechanism for all the entitled beneficiaries who face any kind of difficulties. Any grievance arising out of the present scheme should be put forth at appropriate levels within one week from the date of issuance of the guidelines under the scheme.
The Central Government’s decision to bear the economic burden by granting relief to the eligible beneficiaries will indeed serve as the much required judicious and welcome initiative for the common man, who had to bear the brunt of this unprecedented pandemic situation.