RBI has issued a new notification on the matter of charging interest on interest during the loan moratorium to the banks. In which banks have been directed to return the additional interest charged on the interest to the customers or adjust it in the next installments.
RBI instructions on loan moratorium
The Reserve Bank of India (RBI) has asked all banks and non-government banks to refund the interest-on-interest taken during the Loan Moratorium facility. A notification has also been issued for this. In which, according to the decision of the Supreme Court, banks have been instructed to return the interest money or adjust it.
It may be known that during the Corona period, the facility of Lone More Torium was provided with the help of the Central Government to reduce the sudden loss of jobs and economic problems caused by it. In which the borrowers were given the option to pay the installment later. However, instead of this, interest was being charged on the interest of banks. Which was challenged by the people.
Last month, the Supreme Court barred banks from levying interest or punitive interest on any borrower during the loan moratorium period. During this period, instructions were given to any borrower to return it to the borrower or to adjust it in the next installments, if interest is charged on interest during the period from 1 March to 31 August 2020. Notification has also been issued by RBI in this regard.
RBI says, “All lending institutions have to ensure that the instructions given by the court are followed properly. In case of interest on interest, the amount of money to be returned to the customers or how to adjust it will be decided by the Indian Banks’ Association (IBA). This decision will be adopted by all lending institutions. “
The notification from RBI also stated that the borrowers, whether they have availed the facility during loan moratorium or not, should also get refund or adjustment. For this, lenders should disclose the total amount of interest-on-interest in their financial statements or adjust it in their financial statements.
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