Cabinet okays disbursement of additional compound interest waiver claims

238 million borrowers got waiver of interest-on-interest on loans up to Rs 2 crore

The Union Cabinet has approved an additional payment of about Rs 973 crore on account of pending claims for the government’s compound interest waiver scheme that reimbursed “interest-on-interest” charged on small ticket loans up to Rs 2 crore.

The Centre received total claims of Rs 6,473 crore from 238 million borrowers under the “Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (March 3, 2020 to August 31, 2020)” against Rs 5,500 crore estimated as the outgo earlier. The government had made provision of Rs 5,500 in the Union Budget 2020-21 by extrapolating the share of State Bank of India (SBI)--the nodal agency for the scheme--and scheduled commercial banks for small ticket loans.

Under the scheme for waiving interest-on-interest, MSME, housing, education, consumer durables, auto, credit card dues up to Rs 2 crore were eligible, irrespective of whether the borrower availed of the moratorium.

The Centre had transferred the entire budgeted Rs 5,500 crore to SBI for reimbursement of compound interest to lending institutions. The SBI has received consolidated claims of about Rs 6,473.74 crore from lending institutions, and the Cabinet has granted approval to disburse the remaining Rs 973.74 crore to the state-owned lender. The lender had to settle claims by November 2021.

Date of Claim Submission by SBI	No. of lending Institutions	No. of Beneficiaries	Amount of Claim Received	Amount Disbursed	Pending Disbursement
23/03/2021	1,019	1406,63,979	4,626.93	4,626.93	-
23/7/2021 & 22/9/2021	492	499,02,138	1,316.49	873.07	443.42
30/11/2021	379	400,00,000	216.32	0	216.32
Resubmitted by SBI	101	83,63,963	314	-	314
	1,612	23,89,30,080	6,473.74	5,500.00	973.74

 

As per the scheme, the amount of relief had to be calculated using the difference between simple interest and compound interest, and the period to be reckoned for computing ex-gratia payment was set as March 1, 2020 - August 31, 2020. While calculating the amount, repayments in the loan account during the period had to be ignored, and the rate of interest was reckoned as the rate in the loan agreement. In the case of credit card dues, the rate of interest had to be the weighted average lending rate charged by the card issuer for transactions financed on an EMI basis between March and August.

Fund infusion

The Cabinet Committee on Economic Affairs (CCEA) has also approved equity infusion of Rs 1,500 crore in Indian Renewable Energy Development Agency Limited (IREDA).

The equity infusion will help the IREDA to addtionally lend Rs 12,000 crore in the renewable energy sector, Information and Broadcasting Minister Anurag Thakur said. This would help in funding additional capacity of approximately 3500-4000 MW of renewable energy.

“This equity infusion will help in employment generation of approximately 10,200 jobs-year and CO2 equivalent emission reduction of approximately 7.49 Million Tonnes CO2/year,” said a government statement.