Do you benefit from an exemption from compound interest on the loan account sold by one bank to another? Consult the new FinMin FAQ

Given the resource requirements to meet the challenges posed by the COVID-19 pandemic, the government in May raised states’ borrowing limit to 2% of their MSRP.

Compound interest exemption on commercial vehicles, loan account sold by bank: Do you benefit from the Interest Relief Plan if your loan account has been sold to another lender by your bank? The answer is yes, according to a new clarification released by the Ministry of Finance.

The Ministry of Finance released new FAQs on Tuesday to dispel borrower doubts. He says that individual loans sold by one lending institution to another would be eligible under the program.

“Yes, accounts in the eligible loan category are covered by the program, including personal loan accounts purchased as part of pool buyouts by one lending institution from another,” the ministry said.

Interest Relief on Commercial Vehicle Auto Loan

According to the FAQ, personal commercial vehicle auto loans are covered by the scheme. “Automobile loans, including for commercial vehicles, such as four-wheeled taxis, are eligible under the scheme. “

The FAQ also indicates that the “standard” accounts of the eligible categories of the borrower at 29.2.2020 in a credit institution are covered by the scheme.

“Yes. The accounts of the eligible category of borrowers which are standard at 29.2.2020 are covered by the scheme, ie the loan must not be a non-performing asset (NPA) as at 29.2. 2020 in the credit institution concerned.

As part of the interest relief program, the government aims to provide a benefit to all borrowers by returning the difference between compound interest and simple interest during the six-month loan moratorium announced by RBI. To be eligible for the program, the loan account must not exceed Rs 2 crore.

Credit Card Interest Relief: How Much Would be Eligible for the Benefit?

In another FAQ published on Oct. 29, the ministry said unpaid credit card dues on 02-29-2020 would be taken into account to provide relief to borrowers. And the reference rate applicable for such relief would be the contractual rate (WALR) on 02-29-2020.

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