The RBI asked banks and non-banking finance companies (NBFCs) to immediately implement a policy approved by their board of directors for the withdrawal of interest on interest taken from borrowers during the six-month withholding period last year.
Banks should formulate a policy to return interest charged on interest during the hold period
The Reserve Bank of India (RBI) asked banks and non-banking finance companies (NBFCs) to approve a policy approved by its board of directors for adjustment of interest on borrowers’ interest on interest taken during the six-month moratorium period last year. Apply immediately. The Reserve Bank, in a decision last month, had stopped taking interest on the interest during the freeze period. In order to comply with this decision of the apex court, the Reserve Bank asked the banks to form a refund policy.
The Reserve Bank had last year banned the payment of their loan installments, giving relief package to the borrowers during the COVID-19 pandemic. The borrowers were first extended from March 1 to May 31, and then this moratorium for three more months till August 31.
The amount of interest to be refunded above the interest
The Reserve Bank said in a circular on Wednesday, citing the Supreme Court’s face in the same case, that all lending institutions should implement a refund, adjustment policy approved by their boards of directors as soon as possible. Under this refund policy, the interest amount should be refunded or adjusted against the interest charged on the borrowers during the period of March 1 to August 31, 2020.
The Supreme Court had banned compounding interest
The Supreme Court, in its judgment on 23 March 2021, said that no penal or compound interest should be charged during the six-month freeze period. Any interest that banks and institutions have already recovered should be adjusted in the next installment of the loan account or refunded.
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