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. 

Those who paid EMIs during this period are also eligible for this amount.

People who took a bank loan up to Rs 2 crore will benefit from this ex-gratia from banks. People who have dues in credit cards are also entitled to claim this fund.

The Reserve Bank of India had announced a moratorium for 6 months from March 1 to August 31 following the outbreak of COVID-19. 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.

Last week, RBI asked the financial institutions, including non-banking institutions, to avoid collecting compound interest from loan payments.

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.

Meanwhile, loans taken for agriculture and related sectors will not get the ex-gratia.

The central government will incur an additional liability of Rs 6,500 crore for the implementation of the scheme.