Mumbai| The Reserve Bank of India (RBI) has directed all banks and NBFCs to return or adjust the ‘interest on interest’ paid to borrowers during the moratorium period from March 1 to August 31, 2020, approved by the board. Implement the policy immediately. Last month, the Supreme Court gave a major relief to the big borrowers, ruling that there was no penalty or compound interest on any loan, including loans of more than Rs 2 crore during the six-month deferment announced by the government in the wake of the Kovid-19 pandemic. Will be taken
In a notification issued to all commercial banks and other financial institutions, the RBI stated, “Interest on interest charged to borrowers during the moratorium period March 1, 2020 to August 31, 2020, to all lending institutions in conformity with this decision” “To be returned / adjusted, it will be replaced by a board approved policy.”
To ensure that the Supreme Court ruling is uniformly applied in letter and spirit by all lending institutions, the methodology by the Indian Banks’ Association (IBA) to calculate or adjust the amount for various facilities is the same as that of others. The consultation will be finalized. Industry participants and bodies, which will be adopted by all lending institutions, the couple added.
It is mentioned that the relief will apply to all borrowers, of whom the facilities of working capital were availed during the moratorium period, whether it was fully or partially availed or not availed.
Lending entities shall disclose the total amount to be refunded or adjusted in respect of their borrowers based on the above relief in the financial statements for the year ending March 31, 2021.
Banks may have to borrow around Rs 8,000 crore.