Focus: GS-III Indian Economy
Why in news?
The Reserve Bank of India (RBI) informed the Supreme Court that it has advised banks and financial companies to fully comply with a government scheme to pay back borrowers compound interest or interest on interest, charged on their loans during the six-month moratorium period.
- The RBI said it has “advised” commercial banks, co-operative banks, financial institutions and non-banking financial companies to comply with the government’s pay-back scheme.
- RBI has advised all Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks), all Primary (Urban) Co-operative Banks/ State Cooperative Banks/ District Central Co-operative Banks, all All India Financial Institutions and all Non-Banking Financial Companies (including Housing Finance Companies) to be guided by the provisions of the Scheme and take necessary actions within the stipulated timeline therein.
- The government scheme is meant to bring “additional relief” to borrowers affected by the pandemic-induced financial distress.
- The scheme will cover MSME, education, housing, consumer durables, credit card, auto, personal and consumption loans.
- Clause three of the government scheme defines “all financial institutions” to include banking companies, public sector banks, cooperative banks, regional rural banks, all India financial institutions, non-banking financial companies, housing finance companies registered with the RBI, and national housing banks.
-Source: The Hindu