Ex-Gratia Scheme for borrowers notified! Check eligibility, calculation of interest
Home Banking Ex-Gratia Scheme for Borrowers Notified! Check Eligibility, Calculation of Interest

Ex-Gratia Scheme for Borrowers Notified! Check Eligibility, Calculation of Interest

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Last few months have been the difficult one for most of the people. Covid-19 is the one to be blamed for. Due to the pandemic, many people lost their jobs and others were facing salary cuts, all these things made financial life very difficult. To ease the situation, the government of India announced the “scheme for ex-gratia payment of the difference between compound interest and simple interest for 6 months to borrowers with specific loan accounts.” This scheme was announced after the Supreme Court passed a verdict on this issue. Under this scheme, the eligible loan borrowers will receive the difference between compound interest which was charged between March 2020 and August 2020 and simple interest for the same period. The amount will be credit in the borrower’s loan account, if the loan is closed then the borrower will receive in their bank account. Thereby, a personal loan does seem to be a good option. 

Salient features of the ex gratia to borrowers scheme

  1. The payments will be made to those borrowers account whose loan accounts with sanctioned limit and outstanding is below Rs 2 crore as on March 29, 2020.
  2. In the books of banks and financial institution loan accounts should be standard as on February 29, 2020. 
  3. Payments will be made to those who have taken MSME Loans, Consumer Durable Loans, Education loans, Housing Loans, Credit Card Dues, automobile loans, personal loans to professionals and Consumption loans.
  4. The payment will be made for 6 months i.e 184 days, that begins from March 1, 2020 to August 31, 2020. 

Eligibility criteria for the ex gratia scheme

Only people who have availed these classes of loans are eligible for the scheme:-

  1. MSME loans
  2. Education loans
  3. Housing loans
  4. Consumer durable loans
  5. Credit card dues
  6. Automobile loans
  7. Personal loans to professionals
  8. Consumption loans

Things to know

  • The eligible people need not apply for the ex-gratia scheme anywhere, the amount will be credited to loan borrowers account without any application.
  • All the accounts categorised as SMA-0, SMA-1 and SMA-2 are eligible for the benefit package. 
  • The loan accounts which are under Non-Performing Asset (NPA) can not avail the benefit of ex gratia scheme. 
  • The package is available for the people who have availed for deferment of Interest and Instalment under the RBI COVID 19 relief package.
  • Partially disbursed loans as on 29.02.2020 are also covered under this package.
  • If you have closed the loan after March 1, 2020 and before August 31, 2020 they will get the benefit of up to the date of closure of the loan account.
  • The rate of interest will be considered which was decided at the time of agreement for Education loans, Housing loans, Automobile Loans, Personal loans to professionals and Consumption loans.
  • In consumer durable loans the interest rate will remain the same as decided at the time loan agreement while calculating the differential interest component.
  • In case MSMEs- term loan and demand loan the interest rate will remain the same which was decided at the time of agreement but if there is a cash/credit overdraft the rate of interest will be as on 29.02.2020.
  • In the case of credit cards, the rate of interest shall be the Weighted Average Lending Rate (WALR) charged by the issuer during the period of six months and the reference amount will the outstanding amount, which is the amount settled. If your balance is in credit then you will not receive ex gratia amount.
  • The penalties will be excluded from the interest applied in the account when the interest rate or contracted rate is prevailing February 29, 2020.

Calculation of interest

To calculate the interest you can use the ex gratia payment calculator which will give you all the details like Compound Interest charged between Mar – Aug, 2020, Simple Interest levied between Mar – Aug 2020, and Ex-Gratia compound interest waiver to be offered.

How to use the calculator:- 

  1. Select “Yes or No”, whether your loan is still ongoing or not. 
  2. If your loan account is closed then enter the date when last EMI was paid. 
  3. In the column of the principal amount, enter the principal amount as on February 29,2020. To check the schedule you can refer to the loan statement after March 1, 2020 or use the customer login sector.
  4. Enter the interest rate which was decided at the time agreement.
  5. Within a few seconds, results will appear which will have the following details:-
  • Compound interest charged between Mar – Aug, 2020
  • Simple interest applicable between Mar – Aug, 2020
  • Difference between compound and simple interest- total ex gratia payment 

Conclusion- So, to see if you are eligible for the ex-gratia scheme offered by the government check the eligibility criteria and if yes, then you can use the calculator to see how much amount you will receive as ex-gratia.

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