Agriculture loans are not part of the Indian government’s interest waiver scheme. This move is certainly going to hit the farmers and other stakeholders of the country’s agriculture sector hard.
As it appears, the crop loans, tractor loans and other agriculture loans will not be part of the scheme for ex-gratia payment of difference between interest on loans up to Rs 2 crore.
As the Department of Financial Services’ (DFS), frequently asked questions (FAQ) list says, “Crop loans and tractor loans, etc are agriculture and allied activities loans and are not part of the eight segment/classes eligible under the scheme.”
However, the auto loans, MSME loans, housing loans, education loans, credit card dues, consumer durable loans and consumption loans are under the ambit of the interest waiver scheme, the government has cleared.
Under this scheme, the borrowers will receive ex-gratia payment, difference between compound interest and simple interest for 6 months or 184 days. The borrowers whose aggregate loan sanctions and outstanding is not more than Rs 2 crore as on February 29, 2020 are eligible to get the benefit of the interest waiver scheme.
The interest waiver scheme can be availed by abovementioned class of borrowers for the period of 1st March-31st August, 2020. The finance ministry aims all payments to be credited in the borrowers’ accounts before Diwali by 5th November 2020.
Interest waiver scheme in a nutshell
As per the interest waiver scheme, the lending institutions shall credit the difference between compound interest and simple interest with to the eligible borrowers in their respective accounts for 6-month period irrespective of whether the borrower fully or partially availed the RBI announced moratorium.
The interest waiver scheme is also applicable to those who have not availed the moratorium scheme and continued with the repayment of loans. The central government has announced this scheme as per the direction of the Supreme Court. It is likely to cost the exchequer an amount of around Rs 6,500 crore.
After crediting the amount to the borrowers’ accounts, the lending institution will claim the reimbursement from the central government. All the PSU and private banks along with the NBFCs are covered under this scheme.
The central government has already clarified that these payments do not constitute a legal, contractual or equitable liability of the government and is only an ex-gratia payment to the borrowers to give them financial relief in view of the Covid-19 pandemic.
Also Read: Moratorium mathematics: All you need to know