Bringing on huge relief for lakhs of borrowers who opted for COVID 19 Moratorium between March 2020 to August 2020, the government in the Supreme Court on Saturday agreed to waive off ‘interest on interest’ accrued during the period for loans up to Rs 2 crore.
The benefit of this interest waiver will directly benefit customers of Personal Loans, MSME loans, Education Loans, Home loans, Auto Loans, Credit Card outstanding and other consumer creditlines said the finance ministry in the apex court.
The government further said that it will seek Parliament’s permission for moving the cause.
The waiving off interest during the Moratorium will not only provide relief to stressed individuals and medium, small and micro enterprises (MSMEs) but will also save many of these borrowers from opting for further creditlines or restructuring option amid ongoing pandemic disruptions for economy.
The complete waiver of interest payments for six-month of Moratorium however would cost up to Rs 6 trillion ($82 billion). Earlier the SC had rebuked government for saying that the matter was in discussion with RBI. Where, the Indian Banks’ Association (IBA) had said that instead of a waiver, the Supreme Court may ask the government to extend relief to borrowers.
However in today’s hearing the government shared its willingness to bear the interest cost of Moratorium while citing the financial stress the move may cause in the COVID19 relief management. The hearing will resume on Oct 5 (Monday).
Also Read: Moratorium Continues Virtually as SC Stays Order to not Announce Non-Payment as NPA
Reshma Rawat is a passionate writer with a decade of experience in writing for a variety of domains (finance, technology, lifestyle, e-commerce, real estate, etc.). Currently, she is working as Assistant Manager - Content @MyMoneyMantra and writes blogs & webpages on financial products (loans, credit cards, insurance, government financial policies, mutual funds, etc.).
Director- MyMoneyMantra FinTech| A senior retail and commercial banking professional, adept at handling Business Development, Sales Planning & Growth, Product Strategy, Marketing Operations and Client advisory services phygitally.
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