Ex-Gratia Payment is a scheme declared by the Government of India for the payment of the difference between compound interest and simple interest for six months to the borrowers on loan accounts with limits up to Rs. 2 crores.
The category of borrowers that were eligible under the scheme: (i) MSME loans, (ii) Education loans, (iii) Housing loans, (iv) Consumer Durable loans, (v) credit card dues, (vi) Auto loans, (vii) Personal loans to professionals, and (viii) Consumption loan (all loans up to Rs 2 crores limit)
During the moratorium, the lending institutions were requested to reveal the amount to be adjusted or refunded in the financial statement for the year ending 31, March 2021.
Despite the borrowers had benefitted from the moratorium or not, the ex-gratia payment scheme equally helps the small borrowers to endure the stress during the pandemic and get back to their normal selves.
On Wednesday, a consent of Rs 973.74 crore to the State Bank of India (SBI) as compensation related to the loan moratorium was approved by the Government. It was executed in 2020 among the pandemic.
Anurag Singh Thakur, Information and Broadcasting Minister, briefed on the Cabinet decision that the budget has created a provision of Rs 5,500 crore under the scheme of ex-gratia payment of distinction between simple interest and compound interest to borrowers in defined loan accounts.
In 2020-21, a payment of Rs 4,626 crores was made, and Rs 1,846 crores, an additional claim is yet to be settled.
Hence, to clear this, the Cabinet has permitted the sanction of the remaining Rs 973.74 crores to SBI for payment of these charges
RBI declared a loan moratorium on March 27, 2020, on payment of the loan falling due in installments between March 1 and May 31, 2020, due to the Covid-19 pandemic. Afterward, this was extended to August 31.
By November 30, 2020, during the moratorium scheme, the financial and non-banking financial institutions were requested to credit the distinction between simple interest and compound interest collected on loans of up to Rs 2 crores.
The Ministry of Finance stated that after crediting the amount, subsequently, the lending institutions would declare compensation from the Central Government. SBI was appointed as the nodal agency for the repayment of claims.
Follow and connect with us on Facebook, LinkedIn & Twitter.
