Ex-Gratia scheme-relief of interest during moratorium period-Check your eligibility

ex-gratia scheme

Many of us are getting a text message from our bank that 
“We have credited Rs.***** to your loan account number***** this is as per Government of India scheme of Ex gratia payment”

Meaning of Ex-gratia

In this article I am going to explain the detail about the ex-gratia scheme of Government of India, what is the meaning of Ex gratia, the participating banks what type of loans are covered under this scheme and what is the cap on the loan amount, How much amount you will get under this scheme 

First of all, let’s know what is the meaning of Ex gratia, ex-gratia simply means- “given or done as a gift or favor not because there is a legal duty to do it, it was done because of good intention to help”

 Ex-gratia payment on the interest of loan amount is not a legal duty of Government

 I have gone through the detailed notification of the Reserve Bank of India website, Here I’m going to share key points mentioned in the official notification like- what type of loans are covered what are the participating bank loans which are not covered in this ex-gratia payment scheme so let’s discuss each point

Banks/Financial Institutions covered under the ex-gratia scheme

1- All commercial banks (Including small finance Bank-SFBs, Local area Bank-LABs, Regional Rural Banks-RRBs)

2-All Urban Co-operative Bank ( Cooperative Banks, State cooperative banks, District cooperative bank and Central cooperative banks)

3- All non-banking financial companies-NBFC ( Including Housing Finance Company)

4-All Microfinance institutions which are a member of any SRO recognized by RBI

5-All Housing finance company

Eligibility criteria For Ex gratia Scheme

1- Outstanding of loan amount should not be more than 2 crores as on 29th February 2020

1- Loan account should be standard as on 29th February 2020 Which means loan account must not be NPA before 29th February 2020

3- Loan account where customer opted for the Moratorium are covered under the scheme whereas loan account where borrower do not opt for the moratorium is also eligible for the ex-gratia scheme 

Not Eligible loans under Ex-gratia scheme

1-Loans availed from informal sector or organizations which are not a member of a self-regulatory organization recognized by Reserve Bank of India

2-Loans against securities and fixed deposit 

3- Loan account where loan outstanding amount is greater than 2 crore

4- Loan account which is NPA on 29th Feb’2020

Period of ex-gratia scheme

1.3.2020 to 31.8.2020

Ex gratia payment is the difference between compound interest and simple interest of 6 months i.e.from 1st March 2020 to 31st August 2020 

Amount of Ex-gratia payment

Ex gratia payment on the interest of loan amount will be calculated on the interest rate charged by the bank- the motive of ex-gratia payment on interest is to reimburse interest on interest during the period of lockdown, so under this scheme, the difference between compound interest charged during the period and simple interest during the period will be credited to the borrower’s account

The difference between compound interest and simple interest will be small 

For example suppose there is a loan account where the outstanding loan amount is rupees 1 lac and the interest rate charged by the bank is 8% the borrower will get ex-gratia about rupees 68 only, if the interest rate is 14 % ex-gratia amount will be credited rupees 210

“The government intends to provide relief from interest on interest”

How to apply for the ex-gratia scheme

Borrowed does not need to fill up any form or furnish any proof Lending Institutions are already instructed by the Reserve Bank of India to figure out the loan covered under this scheme and to transfer the ex-gratia payment amount to the respective loan accounts

How to file a complaint

Reserve Bank of India instructed all the lending institutions to construct a grievance redressal system for the ex-gratia complaint handling if anyone eligible for this scheme but did not get benefit till November month-end can complain with the respective Bank

For more detailed information please visit:

RBI NOTIFICATION LINK-https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11989&Mode=0

If you want the link to ex-gratia payment calculator drop your e-mail id in the comment box

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