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. Take the example of a borrower who had a car loan EMI of ₹10,000 and an outstanding of ₹4 lakh. Yes. The lending institution will calculate and credit the due benefit to the loan account. 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 covid-19 pandemic affected the financial situation of many households. No. Is the loan eligible for ex-gratia payment under the scheme? 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. All rights reserved. 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. 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. As banks started crediting the money, many credit card customers posted the amount they received. An EMI comprises of principal and interest portions. The real payout could vary depending on different factors. If the interest rate is 14%, Rs 210 will be credited. Businesses were shut and many employees were either laid off or their salaries were cut. 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. COVID-19 EX GRATIA SCHEME. 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. 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. Copyright © HT Digital Streams Limited All rights reserved. But if the ₹1 lakh was a personal loan at 18%, the payout would be ₹344. Q1. 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. Say, out of ₹10,000,the interest portion was ₹1,000. 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. If you calculate the simple interest on the outstanding, it would be ₹18,000. You are now subscribed to our newsletters. No. 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 central government has approved the ‘interest on interest’ scheme which grants ex-gratia payment of the difference between compound and simple interest to borrowers. 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. In case you can’t find any email from our side, please check the spam folder. 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 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 … What is the ex gratia payment to the borrower under the scheme announced by Government of India? Banks are paying credit card customers who had an outstanding bill amount as on 29 February. Looks like you have exceeded the limit to bookmark the image. 13. © Copyright Mathrubhumi 2020. 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 … Click here to read the Mint ePaperMint is now on Telegram. Will I be eligible for relief if my credit card balance is in “Credit” as on 29.02.2020? Some mentioned that they received a credit of a paltry sum of ₹10 or lesser amounts. Join Mint channel in your Telegram and stay updated with the latest business news. 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. An ex-gratia payment will be credited to their loan accounts. 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. According to this, retail borrowers and small business who have loans up to ₹2 crore won’t need to pay the compounded interest or interest on interest that accrued during the moratorium period. Your session has expired, please login again. 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. Those who paid EMIs during this period are also eligible for this amount. 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. Loans for consumption purposes (e.g., social ceremonies, etc.) 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 didn’t charge “interest on interest". Banks are paying customers who had an outstanding bill amount as on 29 February 2020. Let’s look at the whole process in detail to understand it. Loans for consumption purposes (e.g., social ceremonies, etc.) 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. ➢ Credit Card Dues: Weighted Average Lending rate (“WALR”) charged by Card issuer for transactions The notification said, "The Government of India … 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. Yes. 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. Ex-Gratia Payment Scheme. The compound interest comes out to a very small amount. 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 . Ex Gratia Payment To read the scheme announced by the Government of India (GoI), Ministry of Finance (vide no. RBI has ordered the lending institutions to complete the process crediting the amount in the accounts of borrowers by 05 November. 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 government’s ex-gratia money has been credited to their accounts. The Reserve Bank of India had announced a moratorium for 6 months from March 1 to August 31 following the outbreak of COVID-19. To provide relief to borrowers, the finance ministry came up with a scheme. No. Format For Submission Of Information By Lending Institutions; Statutory Auditor Certificate 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 … 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). The moratorium allowed borrowers to postpone repayment of loans for six months. The bank paid the card holder the difference between the two amounts, which is ₹1,405. The new outstanding for the borrower after the moratorium ended would be ₹4.06 lakh. 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. Take an example of someone who had an outstanding credit card amount of ₹1 lakh as on 29 February and the bank charged him an interest of 3% each month or 18% for six months. 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 “interest on interest" charged. 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. Ex-gratia will not be paid on those credit cards where balance is in “credit” as on 29.02.2020. Through RBI, the ministry asked banks to reimburse the difference between the compound and simple interest on loans to eligible borrowers. People who have dues in credit cards are also entitled to claim this fund. Due to the financial stress, the Reserve Bank of India (RBI) offered six months’ moratorium to borrowers and credit card customers. These are just examples based on certain assumptions to explain the methodology. The central government will incur an additional liability of Rs 6,500 crore for the implementation of the scheme. 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. Banks are paying credit card customers who had an outstanding bill amount as on 29 February Some diligent credit card customers were surprised at … For guidance on ex-gratia payments made to employees/directors on leaving a company see NIM02610 and NIM02620. 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). of India’s grant of ex-gratia payment of difference between compound and simple interest for 6 months. Last week, RBI asked the financial institutions, including non-banking institutions, to … To be sure, this was postponement of EMIs and not a waiver, so lenders added the interest accrued during the moratorium period to the loan’s principal amount. The RBI … We have credited an amount of Rs. Be careful if a payment to a director of a small company is described as ex-gratia. People who took a bank loan up to Rs 2 crore will benefit from this ex-gratia from banks. Ex-Gratia Payment Scheme. 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. Only those borrowers who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs. BP.BC.47/21.04.048/ 2019-20, dated 27.3.2020 and extended on 23.5.2020. But if the interest is compounded, it would come to ₹19,405. 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. 4502.00 to your Card Account XXXX2570 on 05-Nov-20 in accordance with Govt. loan eligible for ex-gratia payment under the scheme? After six months, the interest accrued on the loan will come to ₹6,000, which lenders added to the principal. Remove some to bookmark this image. They could choose not to pay equated monthly instalments (EMIs) during the six months. 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 shouldn’t ignore 143(1) intimation from tax department. For this, the government decided on a formula. Log in to our website to save your bookmarks. Yes. Meanwhile, loans taken for agriculture and related sectors will not get the ex-gratia. What does interest waiver for your credit card dues mean | Photo Credit: Thinkstock It'll just take a moment. BP.BC.47/21.04.048/ 2019-20, dated 27.3.2020 and extended on 23.5.2020. 2 crore (sanctioned limits or outstanding amount) will not be eligible for ex-gratia payment under this scheme Many thought their issuers had made a mistake. 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. loan eligible for ex-gratia payment under the scheme? 2 crore are eligible. 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. 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 amount of money received depends on the outstanding balance and the interest rates. The government on October 23 had announced the scheme for grant of ex-gratia payment of difference between compound interest and simple interest for … 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 … Loans for consumption purposes (e.g., social ceremonies, etc.) The ministry made the scheme available to all borrowers and credit card customers, whether they availed moratorium or repaid on time. 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. 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). Oops! 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