{"id":19243,"date":"2020-11-10T12:19:23","date_gmt":"2020-11-10T06:49:23","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=19243"},"modified":"2020-11-10T18:06:47","modified_gmt":"2020-11-10T12:36:47","slug":"government-directs-banks-to-disburse-ex-gratia-payment-to-eligible-borrowers","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/government-directs-banks-to-disburse-ex-gratia-payment-to-eligible-borrowers\/","title":{"rendered":"Government Directs Banks to Disburse Ex-Gratia Payment to Eligible Borrowers"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Indian government has issued a scheme for the grant of ex-gratia payment to the borrower in a specified loan account from 1\/3\/2020 to 31\/8\/2020. The decision is taken in the view of the COVID 19 pandemic. The government of India has directed all the financial institutions including <a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFCs <\/strong><\/a>to implement the scheme. Here the term \u201c<strong><em>ex-gratia payment<\/em><\/strong>\u201d refers to an amount that comes after subtracting the simple interest from the compound interest w.r.t to the given loan. The lender must roll out the amount to the borrower\u2019s account on or before 05\/11\/2020, giving relaxation to potential borrowers ahead of Diwali. After successful disbursement of the credit, the lender can claim reimbursement from the government by 15\/12\/2020<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/government-directs-banks-to-disburse-ex-gratia-payment-to-eligible-borrowers\/#About_the_Scheme_Ex-Gratia_Payment\" >About the Scheme: Ex-Gratia Payment&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/government-directs-banks-to-disburse-ex-gratia-payment-to-eligible-borrowers\/#Eligibility_Criteria_for_Ex-Gratia_Payment\" >Eligibility Criteria for Ex-Gratia Payment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/government-directs-banks-to-disburse-ex-gratia-payment-to-eligible-borrowers\/#Deployment_of_Grievance_Redressal_Mechanism\" >Deployment of Grievance Redressal Mechanism<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/government-directs-banks-to-disburse-ex-gratia-payment-to-eligible-borrowers\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"About_the_Scheme_Ex-Gratia_Payment\"><\/span>About the Scheme: Ex-Gratia Payment&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Government has communicated the Scheme related to the grant of <strong>ex-gratia payment<\/strong> (compound interest -simple interest)borrowers in specified loan accounts from 1\/03\/2020, to 31\/08\/2020. The government directed the banks to convey that in view of the&nbsp; COVID-19 situation.  <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_Criteria_for_Ex-Gratia_Payment\"><\/span>Eligibility Criteria for Ex-Gratia Payment <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Eligibility-Criteria-for-Ex-Gratia-Payment.png\" alt=\"Eligibility Criteria for Ex-Gratia Payment \" class=\"wp-image-19316\" width=\"572\" height=\"285\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Eligibility-Criteria-for-Ex-Gratia-Payment.png 953w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Eligibility-Criteria-for-Ex-Gratia-Payment-300x150.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Eligibility-Criteria-for-Ex-Gratia-Payment-768x383.png 768w\" sizes=\"(max-width: 572px) 100vw, 572px\" \/><\/figure><\/div>\n\n\n\n<ul><li><a href=\"https:\/\/corpbiz.io\/msme-registration\"><strong>MSME<\/strong><\/a> loan, consumer durable loans, personal loans, housing loans, education loans, automobile loans, consumer loans, and credit card dues eligible under the said scheme.<\/li><li>The amount of the loan should not surpass Rs 2 crore- a total of all the facilities from the financial institutions.&nbsp;<\/li><li>The loan account ought to be a standard account as of 29\/02\/2020. Meaning- the loan should not be tagged as a Non-Performing Asset as of the said date.&nbsp;&nbsp;<\/li><li>The ex-gratia payment would be allowable regardless of whether the borrower has availed or not availed of the moratorium* w.r.t repayment declared by the Reserve Bank via notification DOR. No. BP.BC.47\/21.04.048\/ 2019-20, dated 27.3.2020. Thus, even in the absence of a moratorium period, the borrowers are eligible to avail of the scheme.&nbsp;<\/li><li>The financial firm should not be the entity other than:-<\/li><\/ul>\n\n\n\n<div class=\"ml-4\">\n<p>1. Public sector Bank<\/p>\n<p>2. All India Financial Institution&nbsp;<\/p>\n<p>3. Regional bank&nbsp;<\/p>\n<p>4. Non-Banking Financial Institutions (NBFCs)&nbsp;<\/p>\n<p>5. <a href=\"https:\/\/corpbiz.io\/housing-finance-company-registration\"><strong>Housing Financial Company<\/strong><\/a>&nbsp; <\/p>\n<\/div>\n\n\n\n<ul><li>As per the scheme, the credit account will be equivalent to the difference between the compound interest and simple interest, which will be rendered to the borrowers between March 1, 2020, and August 31, 2020.&nbsp;<\/li><li><strong>Micro-Finance Institutions (MFIs<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/NBFC_%26_MFI_in_India\"><strong>[1]<\/strong><\/a><\/sup><strong>)<\/strong> and Non-Banking Financial Companies (NBFCs) MFIs must be serving as a member of SRO i.e. Self-Regulatory Organization accredited by Reserve Bank of India.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">What is the Moratorium* Period?&nbsp;<\/h3>\n\n\n\n<p>A moratorium period is typically referred to as a timeline during which a borrower can enjoy a holiday from EMIs of home loan. This indicates that you start paying the credit as soon as you avail of the home loan. Rather you can enjoy an EMI holiday and start paying EMIs as soon as the break is over. A lender provides such relaxations so that borrower can plan their finances better.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deployment_of_Grievance_Redressal_Mechanism\"><\/span>Deployment of Grievance Redressal Mechanism<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the government direction that problems related to claims furnished by the financial firms will be managed by the designated cell at State Bank of India in collaboration with GOI. Each financial institution must have a grievance redressal mechanism in place to resolve borrower\u2019s issues related to the present scheme within 1 week from the date on which the scheme becomes effective. While deploying such a mechanism, the firm can take the notification released on 1.10.2020 released by the Indian Banks\u2019 Association pursuant to the framework of COVID -19.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What is Ex-Gratia?&nbsp;<\/h3>\n\n\n\n<p>Ex-gratia is a term that is often used in the financial\ncontext which refers to a kind of grace or relaxation granted by the financial\nfirm to the end-users. As per the above notification, government mandates the\nex-gratia payment to a particular segment of the borrowers via crediting the\ndifference between compound interest (CI) and Simple interest (SI) for a\nspecific timeline i.e. between 1\/03\/2020 to 31\/08\/2020.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The government&#8217;s decision to disburse ex-gratia payment seems to be a generous step towards concerned borrowers. The scheme aims to undermine the repayment issues that borrowers were facing since the inception of this pandemic.&nbsp;<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/rbi-included-cooperative-banks-in-interest-subvention-scheme-for-msmes\/\">\nRBI Included Cooperative Banks in Interest Subvention Scheme for MSMEs\n<\/a><\/mark><\/p>\n\n\n<a href=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Scheme-Letter.pdf\" class=\"pdfemb-viewer\" style=\"\" data-width=\"max\" data-height=\"max\"  data-toolbar=\"bottom\" data-toolbar-fixed=\"off\">Scheme-Letter<br\/><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Indian government has issued a scheme for the grant of ex-gratia payment to the borrower in a specified loan account from 1\/3\/2020 to 31\/8\/2020. The decision is taken in the view of the COVID 19 pandemic. The government of India has directed all the financial institutions including NBFCs to implement the scheme. Here the [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":19247,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[153,91],"tags":[1198],"acf":{"service_id":"410"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":5557,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19243"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=19243"}],"version-history":[{"count":14,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19243\/revisions"}],"predecessor-version":[{"id":19389,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19243\/revisions\/19389"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/19247"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=19243"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=19243"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=19243"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}