Interest Waiver: Gold Loan Borrowers to be Eligible for Cashback from Lenders, says Govt

The consumption loans will also be eligible for the interest waiver scheme, the finance ministry clarified on Wednesday. "Consumption loans, including those backed by gold as collateral, are eligible under the interest waiver scheme," the finance ministry said.

The ministry on Wednesday issued another round of FAQs on the latest "interest on interest" scheme. Following the directions of the Supreme Court, the central government agreed to "provide ex-gratia payment to the borrower account of the difference between compound interest and simple interest on loan accounts for the period from 1 March 2020 to 31 August.

The loan accounts with outstanding up to ₹2 crore will be eligible for the interest waiver scheme. The account should be standard as on 29 February, 2020. The period reckoned for refund shall be from 1 March to 21 August, 2020, that is six months period or 184 days, the finance ministry said.

The lending institution must be either a banking company, or a public sector bank, or a co-operative bank or a regional rural bank, or an all India financial institution, or a non-banking financial company or a housing finance company registered with RBI or national housing bank for rolling out the ex-gratia payment.

The benefit will be extended for loans availed across eight categories: 1) Micro, small and medium enterprises (MSMEs) loans, 2) Education loans, 3) Housing loans, 4) Consumer durables loans, 5) Credit card dues, 6) Auto loans, 7) Personal and professional, 8) Consumption loans. However, agriculture and allied activity loans are not part of the waiver.

"Individual loans from the eight eligible categories of borrowers, including those categorised as micro, small and medium enterprises (MSME) by the lending institution, are covered under the scheme irrespective of the nature of guarantee," the ministry added.

The banks have already started rolling out the cashback to eligible borrowers. The Reserve Bank of India asked all the lending institutions, including non-banking financial companies to implement the 'interest waiver' scheme by 5 November.

Credit card users will also get the benefits of interest waiver scheme. Individual loans sold by one lending institution to another can also avail the benefits of this scheme. "Automobile loans including for commercial vehicles, such as four-wheeler taxi, are eligible under the scheme," the finance ministry clarified.

The ex-gratia payment under this scheme shall be admissible irrespective of whether the borrower had fully availed or partially availed or not availed of the moratorium on repayment announced by RBI, the ministry earlier mentioned.