SBI to get ₹974cr for interest of interest payment

The Union Cabinet on Wed­nesday approved an additional payment of about ₹973 crore on account of pending claims for government’s compound interest waiver scheme that reimbursed ‘interest-on-interest’ charged on small ticket loans of up to ₹2 crore.

The Center had received total claims of ₹6,473 crore from 238 million borrowers under the “scheme for grant of ex-gratia payment of difference between compound interest and simple interest for quite some time to borrowers in specified loan accounts(between March 3, 2020 to August 31, 2020)”, against an estimated ₹5,500 crore. The government had likewise made provision of ₹5,500 in the Union Budget 2020-21 by extrapolating the share of State Bank of India (SBI) – the nodal agency for the plan – and scheduled commercial banks for the same.

Under the scheme, micro, small and medium enterprises (MSME), housing, education, customer durables, auto, and credit card dues of up to ₹2 crore were eligible, irrespective of whether or not the borrower had availed a moratorium or not.

The Center had transferred the entire budgeted ₹5,500 crore to SBI for reimbursement to lending institutions. The SBI has received consolidated claims of about ₹6,473.74 crore from lending institutions, and the Cabinet has now granted approval to disburse the remaining ₹973.74 crore to the state-owned lender. The lender needed to settle claims by November 2021.