Interest on interest: The RBI has given strict instructions to banks to formulate a policy of ‘interest on interest’ refunds.
Interest on interest: The Reserve Bank of India (RBI) has directed all banks and NBFCs to refund the ‘interest on interest’ paid to the March recipients during the period of suspension from March 1 to August 31, 2020 or immediately to implement the policy approved by the Board. Last month, the Supreme Court gave a big relief to the big orrow recipients, ruling that there was no penalty or compound interest on any loan, including loans of more than Rs 2 crore during the six-month adjournment announced by the government in front of Kovid. 19 The epidemic will be accepted Read more – Supreme Court to hear appeals from Maharashtra government and Anil Deshmukh on Thursday
In a circular issued to all commercial banks and other financial institutions, the RBI said, “In line with this decision, the suspension period of all lending institutions is from March 1, 2020 to August 31, 2020. It will be replaced by a board during the period. Approved ‘interest on interest’ refund / adjustment policy Read more – RBI Monetary Policy 2021: No Bank Needed for RBI Gifts, RTGS and NEFT
To ensure that fair court judgments are applied equally in letter and spirit by all donors, the method of calculating or adjusting the amount for various benefits will be finalized by the Banks Association of India (IBA) in consultation with others. It further states that industry participants and organizations, which will receive all donors. Read more – RBI Monetary Policy 2021: Find out how the repo rate change will affect your EMIs and FDs here
It was stated that the relief would apply to all ers recipients, including those who had availed working capital benefits at the time of suspension, whether or not they were taken in whole or in part.
In the financial statements ending March 31, 2021, on the basis of the above relief, the paying companies will disclose the total amount returned or adjusted with the consent of their orrow recipients.
Banks may have to borrow about Rs 8,000 crore.