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Centre tells Supreme Court it will deposit compound-simple interest difference directly to accounts by Nov 5

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New Delhi (ILNS): The Central Government has filed a detailed affidavit before the Supreme Court in connection with the loan moratorium case, stating that the difference between compound interest and simple interest will be deposited in the account of borrowers by November 5.

This decision was taken by the Ministry of Finance and has been approved by the Union Cabinet in its meeting held on October 21.

The Centre said in its affidavit that the Ministry of Finance has approved the policy of interest waiver scheme for borrowers of specified loan for a period ranging from March 1 to August 31. 

Ministry of Finance

The bench of Justices Ashok Bhushan, R. Subhash Reddy and MR Shah has heard a batch of pleas raising issues pertaining to validity of RBI’s March 27 circular which allowed lending institutions to grant moratorium on payment of instalments of term loans falling due between March 1, 2020 and May 31 this year due to the pandemic.

The amount shall be credited by each of the lending institutions, irrespective of whether such eligible borrowers have fully availed or partially availed or have not availed of the moratorium such as deferment in payment of instalments, the affidavit stated.

The affidavit submits that the decision came to be approved by the Cabinet on October 21 and pursuant to this approval, the Finance Ministry has now issued the scheme.

As per this scheme, the lending institutions will credit the difference between compound interest and simple interest for the six-month period in respective accounts of the borrowers irrespective of whether the borrower has fully or partially availed the moratorium announced by the Reserve Bank of India on March 27, 2020, on repayment of the loans.

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The affidavit comes after Supreme Court had pulled up the Centre on October 14, for its delay in implementation of their decision for providing benefits to small borrowers who had taken loans of up to 2 Crores.

The Supreme Court is scheduled to hear the loan moratorium petitions seeking a direction to waive interest on interest on November 2.

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