Cabinet approves sanctions of Rs973.74cr for loan moratorium

The Union Cabinet has approved the payment of ex-gratia amount of Rs973.74cr pertaining to remaining claims submitted by Lending Institutions (LIs) under Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020).

By granting ex-gratia payment of difference between compound interest and simple interest during the six month moratorium period to distressed/vulnerable category of borrowers, irrespective of whether the borrower had availed of moratorium or not, the scheme would equitably help small borrowers bear the stress on account of the pandemic and get back on their feet.

Operational guidelines for the scheme are already issued with the approval of the Cabinet. The said amount of Rs973.74cr will be disbursed in accordance with the said operational guidelines.

In the context of the COVID-19 pandemic, “Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020)” was approved by the Cabinet in October, 2020, envisaging therein an outlay of Rs5,500cr.

Following category of borrowers were eligible for ex-gratia payment under the scheme:

Budget allocation of Rs5,500cr was made for the scheme in FY 2020-2021. Whole amount of Rs5,500cr, as approved by the Cabinet, has been disbursed to SBI, the nodal agency under the scheme, for consequent reimbursement to lending institutions.

The estimated amount of Rs5,500cr was arrived at by extrapolating the share of SBI and Scheduled Commercial Banks for the aforementioned category of loans. It was also apprised to the Cabinet that the actual amount would be known once individual lending institutions submit their pre-audited account-wise claims.

Now, SBI has informed that it has received consolidated claims of Rs6,473.74cr approx. from lending institutions. As Rs5,500cr has already been disbursed to SBI, approval of the Cabinet is now being sought for balance amount of Rs973.74cr.

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( With inputs from indiainfoline)