Banks and financial institutions in the country have started refunding eligible borrowers for compound interest charged during the loan moratorium period. Here is how individuals can find out if their bank has credited the refund in their account.
All banks and financial institutions in the country have started refunding eligible borrowers for the ‘interest on interest’ or compound interest charged during the loan moratorium period, as directed by the government.
The government had earlier asked the banks to refund the difference between simple and compound interest to eligible borrowers on or before November 5. So, all the banks and financial institutions are expected to credit the refund or cashback to eligible borrowers by the end of the day.
It may be noted that all individual borrowers and small businesses with loans up to Rs 2 crore are eligible for a refund or cashback under the government’s loan moratorium compound interest waiver scheme. Borrowers who had not opted for the moratorium are also eligible for a refund if they meet the eligibility criteria.
While the loan moratorium case is still being heard in Supreme Court, the government had recently passed a scheme to “grant ex-gratia payment of the difference between compound and simple interest to borrowers of specified loan accounts” from March 1, 2020 to August 31, 2020.
The Reserve Bank of India then asked all banks in the country to refund the difference between simple and compound interest to all eligible borrowers under the scheme.
So how will customers know if they have been refunded or have received a cashback? Banks are likely to send a text message to the concerned borrower on his/her mobile number that is registered with the bank.