Will you benefit from Covid-19 loan relief? Will there be relief on credit card dues? Know here

By Shivani Reddy On Oct 28, 2020

The government has said that this amount will be sent to the loan account of the borrowers before Diwali. The government has said that after depositing this amount in the accounts of the borrowers, the lenders will be able to claim the payment of this amount from the central government.

But the real question is, who will benefit from this scheme?

This loan relief will be available on personal, housing, education, auto and consumer durable loans, MSME and outstanding credit card under certain conditions. Even if the borrower opts for full or partial relief, the lender will send this amount to their account. The loan account is active till February 29 and its limit is mandatory to be within 2 crores.

The scheme also states that eligible borrowers will also get voluntary relief, irrespective of whether or not they have opted for relief on payments within a period of six months. In other words, if you have asked your bank or financier for relief due to coronavirus lockdown or not, this amount will come in your loan account.

What is the amount of this relief, and how much money will come in your account?

In this notification of RBI, it said that all the lending institutions under the scheme will deposit the difference of compounding and normal interest in the accounts of all eligible kajdars for the period between March 1, 2020 to August 31, 2020.

Compound interest or compound interest, also called interest on interest, is the interest created on the delay in payment of principal money. That is, if there is a delay in repaying the loan, then under the normal rules of banking, interest starts to rise separately on this period. A petition is being heard in the Supreme Court on the relief of interest on interest during the loan moratorium period.

This month, the Supreme Court had asked the government to provide loan relief to the eligible borrowers at the earliest as it is not in the interest of the general public to delay the scheme. In fact, the RBI had announced the loan moratorium period, saying that between March and August, borrowers have an exemption to not repay the loan installments. Along with this, the central bank had also allowed the lenders to take the compound interest that was being created during this period. That is, banks and lending institutions were giving discounts to their customers that they should not repay their loan installments between March and August, but the borrowers had to fill their compound interest again during this period.

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