Ex gratia scheme: A stitch in time?
The final verdict from the Reserve Bank of India (RBI) was out on October 26, 2020. It put an end to a spiralling controversy and the subsequent legal battle fought between the State and Gajendra Sharma, the optician from Agra, who challenged the legality of charging interest on deferred EMIs during the moratorium period of March 1 to August 31, 2020. The precursor to this was the affidavit submitted by the Ministry of Finance, who was a party to the original litigation. It came up with a scheme through a notification dated October 23, suitably named “Scheme for grant of ex gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020) (EGS).” To put things into perspective, the RBI reprieve, offered on existing loans from banks, NBFCs, HFCs, MFIs and financial institutions came with three major riders - interest payable on the overdue EMIs unpaid during the period of moratorium availed, the in