For this, the government decided on a formula. Even if the loan has ended by now, the borrower will get pro-rata benefit for the period it was active between March 1 and August 31. An EMI comprises of principal and interest portions. On 23rd October 2020 Ministry of Finance, Government of India issued direction to all lending institutions to implement Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020). Ex-gratia will not be paid on those credit cards where balance is in “credit” as on 29.02.2020. As banks started crediting the money, many credit card customers posted the amount they received. New Delhi: The Reserve Bank of India (RBI) issued direction on Tuesday to all lending institutions to implement provisions of Scheme for grant of ex-gratia payment of difference between compound and simple interest for six months to borrowers in specified loan accounts (1 March to 31 Aug) and take necessary action within the stipulated time. No. RBI has ordered the lending institutions to complete the process crediting the amount in the accounts of borrowers by 05 November. Loans for consumption purposes (e.g., social ceremonies, etc.) Ex Gratia Payment To read the scheme announced by the Government of India (GoI), Ministry of Finance (vide no. The new outstanding for the borrower after the moratorium ended would be â¹4.06 lakh. No. Some diligent credit card customers were surprised when they received a message from their issuers informing that the government’s ex-gratia money has been credited to their accounts. We have credited an amount of Rs. Meanwhile, loans taken for agriculture and related sectors will not get the ex-gratia. People who have dues in credit cards are also entitled to claim this fund. Is the loan eligible for ex-gratia payment under the scheme? The lending institution will calculate and credit the due benefit to the loan account. To provide relief to borrowers, the finance ministry came up with a scheme. An ex-gratia payment will be credited to their loan accounts. Scheme of ex gratia payment of difference between compound interest and simple interest ..” Scheme for grant of ex gratia payment of difference between compound interest and simple interest for six months to borrowers in specific loan accounts . Take the example of a borrower who had a car loan EMI of â¹10,000 and an outstanding of â¹4 lakh. Banks are paying credit card customers who had an outstanding bill amount as on 29 February. Credit card dues are eligible for ex-gratia payment of the difference between simple interest and compound interest for the moratorium period of six months i.e March 1, 2020 till August 31, 2020. Scheme for grant of Ex-gratia payment of difference between compound interest and simple interest for six months to borrower in specified loan accounts (01.03.2020 to 31.08.2020) (2.85 MB) FAQ on COVID-19 Ex-gratia to borrowers for difference in interest dated 26.10.2020. The Ex-Gratia payment under this scheme shall be applicable if you fall under below categories: (1) had fully availed or partially availed or not availed of the moratorium on repayment announced by RBI ride its circular DOR. The moratorium allowed borrowers to postpone repayment of loans for six months. 13. 2 crore (sanctioned limits or outstanding amount) will not be eligible for ex-gratia payment under this scheme 2 crore are eligible. Ex-Gratia Payment Scheme. To be sure, this was postponement of EMIs and not a waiver, so lenders added the interest accrued during the moratorium period to the loanâs principal amount. Log in to our website to save your bookmarks. ➢ Credit Card Dues: Weighted Average Lending rate (“WALR”) charged by Card issuer for transactions They could choose not to pay equated monthly instalments (EMIs) during the six months. Yes. Ex-Gratia On Loan Moratorium Applicable For All At the start of this month, some credit card providers surprised their customers as they credited the government’s ex-gratia money to … After six months, the interest accrued on the loan will come to â¹6,000, which lenders added to the principal. are also eligible for coverage under the scheme, besides other specified categories of loans like consumer durables, automobiles, education, credit card dues, housing and personal loans to professionals. of India’s grant of ex-gratia payment of difference between compound and simple interest for 6 months. It'll just take a moment. Say, out of â¹10,000,the interest portion was â¹1,000. Copyright © HT Digital Streams Limited All rights reserved. The RBI … COVID-19 EX GRATIA SCHEME. Looks like you have exceeded the limit to bookmark the image. loan eligible for ex-gratia payment under the scheme? The payment is made in the public interest for loss or expenditure incurred where the Crown has no obligation of any kind or has no legal liability, or where the claimant has no right of payment or is not entitled to relief in … Take an example of someone who had an outstanding credit card amount of â¹1 lakh as on 29 February and the bank charged him an interest of 3% each month or 18% for six months. According to this, retail borrowers and small business who have loans up to â¹2 crore wonât need to pay the compounded interest or interest on interest that accrued during the moratorium period. For guidance on ex-gratia payments made to employees/directors on leaving a company see NIM02610 and NIM02620. Yes. Banks are paying customers who had an outstanding bill amount as on 29 February 2020. Sovereign gold bond's 10th tranche to open on Monday, price fixed at, Now, a price index for health and term insurance policies, Know why you shouldnât ignore 143(1) intimation from tax department. Q1. The compound interest comes out to a very small amount. Loans including Micro, Small and Medium Enterprises (MSME) loans, Education loan, housing loan, consumer loan, credit card dues, vehicle loan, personal and professional loans are listed for this benefit. The government on October 23 had announced the scheme for grant of ex-gratia payment of difference between compound interest and simple interest for … Some mentioned that they received a credit of a paltry sum of â¹10 or lesser amounts. The bank/ lending institution will provide ex gratia payment to the borrower account of the difference between compound interest and simple interest on loan accounts with sanctioned limits and outstanding upto Rs. Will I be eligible for relief if my credit card balance is in “Credit” as on 29.02.2020? Businesses were shut and many employees were either laid off or their salaries were cut. Remove some to bookmark this image. The notification said, "The Government of India … What does interest waiver for your credit card dues mean | Photo Credit: Thinkstock Ex-Gratia Payment Scheme. You are now subscribed to our newsletters. Hero Fincorp Ltd. will provide ex gratia payment to the customers account of the difference between compound interest and simple interest on loan accounts with sanctioned limits and outstanding upto Rs. Banks are paying credit card customers who had an outstanding bill amount as on 29 February Some diligent credit card customers were surprised at … What is the ex gratia payment to the borrower under the scheme announced by Government of India? interest is being charged on EMI for a specified period, for the purpose of ex-gratia payment, interest may be applied at lenders base rate / Marginal Cost of Funds based Lending rate (MCLR), whichever is applicable. Loans for consumption purposes (e.g., social ceremonies, etc.) Many thought their issuers had made a mistake. But if the â¹1 lakh was a personal loan at 18%, the payout would be â¹344. No. 2 crores (aggregate of all the borrowings / facilities from all the banks and financial Institutions) for the period from 1st March 2020 to 31st August 2020 (6 months / 184 days). The Government of India has announced the scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (01-03-2020 to 31-08-2020) (the ‘Scheme’) on 23-10-2020, which mandates ex-gratia payment to certain categories of borrowers by way of crediting the difference between simple interest and compound interest for the … These are just examples based on certain assumptions to explain the methodology. Join Mint channel in your Telegram and stay updated with the latest business news. The government had announced on 23.10.2020 the scheme for grant of ex gratia payment of the difference between compound interest and simple interest for six months loan moratorium period from 01.03.2020 to 31.08.2020 to borrowers in specified loan accounts.The lending institutions have been asked to complete the exercise of crediting the amount in the accounts of borrowers by November 5. MUMBAI: Loans against fixed deposits, bonds and shares will not be eligible for relief under the government scheme for an ‘ex gratia’ payment to borrowers of up to Rs 2 crore. Some diligent credit card customers were surprised at the start of this month when they received a message from their issuers informing them that the governmentâs ex-gratia money has been credited to their accounts. Format For Submission Of Information By Lending Institutions; Statutory Auditor Certificate Those who paid EMIs during this period are also eligible for this amount. loan eligible for ex-gratia payment under the scheme? BP.BC.47/21.04.048/ 2019-20, dated 27.3.2020 and extended on 23.5.2020. All rights reserved. Letâs look at the whole process in detail to understand it. Last week, RBI asked the financial institutions, including non-banking institutions, to … The central government will incur an additional liability of Rs 6,500 crore for the implementation of the scheme. The Ex-Gratia payment under this scheme shall be applicable if you fall under below categories: (1) had fully availed or partially availed or not availed of the moratorium on repayment announced by RBI ride its circular DOR. ex gratia payment (paiement à titre gracieux) A benevolent payment made by the Crown used only when there is no other statutory, regulatory or policy vehicle to make such a payment. Guidance on how ex-gratia payments are managed and resolved, and how actual and non-financial losses are assessed by UK Visas and Immigration, Immigration Enforcement and Border Force. 4502.00 to your Card Account XXXX2570 on 05-Nov-20 in accordance with Govt. The central government has approved the ‘interest on interest’ scheme which grants ex-gratia payment of the difference between compound and simple interest to borrowers. If the interest rate is 14%, Rs 210 will be credited. The Government of India has announced a Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (01.03.2020 to 31.08.2020) (the ‘Scheme’) on October 23, 2020, which mandates ex-gratia payment to certain categories of borrowers by way of crediting the difference between simple interest and compound … Ex Gratia Payment is a scheme announced by 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 sanctioned limits and outstanding upto Rs. BP.BC.47/21.04.048/ 2019-20, dated 27.3.2020 and extended on 23.5.2020. In case you canât find any email from our side, please check the spam folder. The ex-gratia payment credited to the customer account will be the relief on compound interest promised ... and whether ex-gratia on credit card will … Only those borrowers who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs. Your session has expired, please login again. Last week, RBI asked the financial institutions, including non-banking institutions, to avoid collecting compound interest from loan payments. On 23rd October 2020 Ministry of Finance, Government of India issued direction to all lending institutions to implement Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020). If you calculate the simple interest on the outstanding, it would be â¹18,000. Yes. In other words, if you spent through your card before 29 February, you would be eligible for the ex-gratia money even if you cleared your bill within the due date but after 29 February. are also eligible for coverage under the scheme, besides other specified categories of loans like consumer durables, automobiles, education, credit card dues, housing and personal loans to professionals. The real payout could vary depending on different factors. If your lender has not made any payment, approach the institution if you have a retail loan, including home, auto, two-wheeler, personal, consumer durable and education loan, or had credit card outstanding as on 29 February. Due to the financial stress, the Reserve Bank of India (RBI) offered six monthsâ moratorium to borrowers and credit card customers. New Delhi: The banks will remit an amount under ‘interest on interest’ scheme in the account of borrowers who paid interest on loans during the moratorium period. People who took a bank loan up to Rs 2 crore will benefit from this ex-gratia from banks. Be careful if a payment to a director of a small company is described as ex-gratia. The same was the case with those who surrendered their credit cards during the moratorium period or cleared off their loans in the past eight months. The bank paid the card holder the difference between the two amounts, which is â¹1,405. Through RBI, the ministry asked banks to reimburse the difference between the compound and simple interest on loans to eligible borrowers. © Copyright Mathrubhumi 2020. The Ex-Gratia Payment Scheme is the payment of the difference between the Compound Interest and the Simple Interest for six months ending 31 August 2021 to borrowers in specified loan accounts. For example on an outstanding loan of Rs 1 lakh( with an interest rate of 8%), the borrower will get an ex-gratia of about Rs 68. The ministry made the scheme available to all borrowers and credit card customers, whether they availed moratorium or repaid on time. Lenders recalculated the tenure based on the new principal and, consequently, many saw an increase in the term of the loan in lieu of the âinterest on interest" charged. The covid-19 pandemic affected the financial situation of many households. Click here to read the Mint ePaperMint is now on Telegram. Credit card dues ; Automobile loans Personal loans to professionals; Consumption loans; Any borrower whose aggregate of all facilities with lending institutions is more than Rs. The Reserve Bank of India had announced a moratorium for 6 months from March 1 to August 31 following the outbreak of COVID-19. But if the interest is compounded, it would come to â¹19,405. The same is true for those who surrendered their cards or repaid loans after 29 February.Some banks, like Standard Chartered Bank, claimed that they are not giving ex gratia payment for credit card holders as they didnât charge âinterest on interest". Oops! F. No.2/12/2020 – BOA.I dated 23rd October, 2020), for grant of ex-gratia payment of difference between compound interest and simple interest for six months i.e. are also eligible for coverage under the scheme, besides other specified categories of loans like consumer durables, automobiles, education, credit card dues, housing and personal loans to professionals. Kerala reports 5,887 new Covid-19 cases; test positivity rate at 9.53 percent, Telugu star Ram Charan tests positive for Covid-19, New variant of Covid virus found in 6 UK returnees, Employees seek extension of benefits in case of Air India privatisation, 'Railways will meet its operating expenditure from its earnings', China to overtake US as world's biggest economy by 2028: Report, Spices export gets a boost amid Covid pandemic, crosses 7 lakh tonne in India, Delhi had highest per-capita economic loss due to air pollution in 2019: Lancet. Loans for consumption purposes (e.g., social ceremonies, etc.) They were taken aback as they had paid their dues on time and were not expecting the ex-gratia money that has been announced for the moratorium period between March and August. The central government has approved the ‘interest on interest’ scheme which grants ex-gratia payment of the difference between compound and simple interest to borrowers. 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