The Center has decided to waive compound interest on loans up to Rs 2 crore for a six-month moratorium, due to the coronavirus pandemic. The Centre also said it will seek due authorization from Parliament for making appropriate grants.
“The endeavor shall be over and above the support of Rs 3.7 lakh crore to MSMEs, Rs 70,000 crore for home loans, etc. already extended through the Garib Kalyan and Aatma Nirbhar packages announced by the government earlier,” it said.
The government categorizes these loans into eight categories: MSME (Micro, Small and Medium Enterprises), Education, Housing, Consumer Durability, Credit Card Arrears, Auto, Personal, and Consumption. The interest compound states that any person/entity with a debt of more than Rs 2 crore is not eligible for the waiver.
Because of the cumulative conditions, the government has decided to continue the tradition of holding small borrowers by the hand after carefully considering and weighing all the options.
The Center has filed an affidavit in response to a petition filed in the Supreme Court raising issues related to the validity of the RBI’s March 27 circular granting a temporary ban on lending institutions on the repayment of term loans falling between March 1, 2020. And May 31 this year due to the epidemic. Subsequently, the suspension was extended until August 31.