Union Cabinet Approves Scheme for Grant of Ex-gratia Payment of Rs.973.74 Crore for Compound and Simple Interest for Six Months
The Union Cabinet, led by Hon’ble Prime Minister Shri Narendra Modi, has approved the payment of an ex-gratia amount of Rs.973.74 crore to Lending Institutions (LIs) for remaining claims submitted under the Scheme for grant of ex-gratia payment of difference between compound and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020).
The scheme would equitably help distressed/vulnerable borrowers bear the stress of the pandemic and get back on their feet by granting ex-gratia payments of the difference between compound and simple interest during the six-month moratorium period, regardless of whether the borrower had taken advantage of the moratorium or not.
The Cabinet has already given its approval to the scheme’s operational rules. The Rs.973.74 crore will be distributed in compliance with the operating norms.
The Cabinet approved a “Scheme for grant of ex-gratia payment of difference between compound and simple interest for six months to borrowers in selected loan accounts (1.3.2020 to 31.8.2020)” in October 2020 in response to the COVID-19 pandemic, with a budget of Rs.5,500 crore. Under the system, the following types of borrowers were eligible for ex-gratia payments:
- MSME loans up to Rs.2 crore
- Education loans up to Rs.2 crore
- Housing loans up to Rs.2 crore
- Consumer durable loans up to Rs.2 crore
- Credit card dues up to Rs.2 crore
- Auto loans up to Rs.2 crore
- Personal loans to professionals up to Rs.2 crore
- Consumption loans up to Rs.2 crore
In the fiscal year 2020-2021, a budget allocation of Rs.5,500 crore was provided for the scheme. The entire amount of Rs.5,500 crore has been paid to SBI, the scheme’s nodal agency, for repayment to lending institutions, as agreed by the Cabinet.
Extrapolating the contribution of SBI and Scheduled Commercial Banks in the aforementioned category of loans yielded a figure of Rs.5,500 crore. The Cabinet was also informed that the real amount would be determined once individual lending institutions submitted their pre-audited account-by-account claims.
SBI has now announced that it has received consolidated claims from lending institutions totaling about Rs.6,473.74 crore. Because SBI has already received Rs. 5,500 crore, the Cabinet’s clearance is now required for the remaining Rs.973.74 crore.