On Wednesday, RBI said to all lending institutions shall immediately put in place a board approved policies to refund and to adjust the interest on interest charged to the borrowers during the moratorium period I. e., March 1,2020 to Aug 31,2020 during six months period. RBI asked the Non Banking Financial Companies to refund these interest on interest which was collected during covid moratorium on loans.
This will apply to all borrowers, irrespective of the moratorium which been fully Or partially availed. An order given by the Supreme Court on Match 23,2021 that certain policies to be made for refund/adjust the interest on interest charged to the borrowers.
These moratorium period refers to the period of time during which the institution or the individuals do not have to pay an EMI on the loan which they have taken. And interest on interest refers that the payments which are reinvested. Coupon payments from bonds are assumed to be invested at some interest rate and held until the bond is sold or matures.