The Finance Ministry has clarified that the interest on the interest-on-interest waiver scheme will not be available for loans related to agriculture and allied activities. The Finance Ministry on Thursday released an additional FAQ (Frequently Asked Questions) on the 'Grace Relief Payment Scheme' related to the payment of the difference between compounding and simple interest.
The Finance Ministry said that the borrowers will also get the benefit of this scheme for arrears on credit cards till February 29. The FAQ states that the benchmark rate for this relief will be the contract rate, which is used by credit card issuers for EMI loans. The Finance Ministry clarified that a total of eight areas fall under this scheme. Crop and tractor loan comes under agriculture and allied activities which are not included in the scheme. The Reserve Bank of India (RBI) had asked all lending institutions on Tuesday to implement the Interest Waiver Scheme on recently announced interest for loans up to Rs 2 crore.
Under this scheme, the interest charged above the interest on loans up to two crore rupees will be waived for six months from March 1, 2020. The government last Friday announced a grace or grant for six months to pay the difference between compound interest and simple interest for eligible loan accounts. The government had asked all banks to deposit the difference between compound interest and simple interest till November 5 in the account of the borrowers.