The Reserve Bank of India (RBI) has informed the Supreme Court on Sunday that it has asked all banks to be guided by an October 23 "Scheme for grant of ex gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts.” (Gajendra Sharma vs UOI).An affidavit filed by the Assistant General Manager with the Department of Supervision (Banking) of the RBI before the top Court states that in view of the unprecedented and extreme COVID-19 scenario, the October 23 scheme was put in place. .The scheme would apply for the 6 month period from March 1, 2020 to August 31, 2020. Borrowers who have availed loans or credit under the following categories would be eligible to avail the benefits under the scheme:MSME loansEducation loansHousing loansConsumer durable loansCredit card duesAutomobile loansPersonal loan to professionalsConsumption loans.[RBI loan moratorium] File additional affidavits on sectoral relief; place Kamath Committee report on record: Supreme Court to Centre, RBI.The RBI has now asked all banks to be guided by the scheme vide a October 26 correspondence. ."RBI has advised all the Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks), All Primary (Urban) Co-operative Banks/ State Co- operative 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."says the affidavit.As per the scheme, the eligibility is also subject to the following conditions and stipulations:The Loan account should not be a non-performing asset on February 29,2020.The lending institution must be either a banking company or a public sector bank or a co-operative bank or a Regional Rural Bank or an All India Financial Institution or a NBFC or a registered Housing Finance Company.The ex gratia payment under this scheme shall be admissible irrespective of whether the borrower concerned had availed the moratorium on repayment announced by RBI..RBI loan moratorium circular: Supreme Court gives Centre and RBI two weeks' time to submit plan on sector-wise loan restructuring.The rate of interest would be as is prevalent on February 29, 2020..Benefits under the scheme would be routed through lending institutions and the exercise of crediting the amount by the respective lending institutions has to be completed on or before November 5, 2020..Issues and concerns relating to claims submitted by lending institutions shall be handled through the designated cell at the State Bank of India in consultation with Government of India..Each lending institution shall also put in place a grievance mechanism for the redressal of grievance of eligible borrowers..Earlier, in an additional affidavit filed before the Supreme Court, the RBI had submitted that an extension of the loan moratorium introduced in light of the COVID-19 pandemic beyond a period six months is unsustainable and poses risk to lenders..Extension of moratorium beyond six months unsustainable, might vitiate credit discipline and increase delinquency: RBI to Supreme Court.If the moratorium period is extended beyond six months, the same can also vitiate overall credit discipline, the RBI had told the apex court..A long moratorium may affect the credit behaviour of borrowers and pose a risk of delinquency in terms of repayment when scheduled payments are resumed, the affidavit had said, underscoring that the impact may trickle down to small borrowers.