In the affidavit filed in the SC, Finance Ministry said the Govt will bear the burden on banks due to the waiver of interest or compound interest on interest in Moratorium.
New Delhi| The central government has given a big relief to individuals and MSME borrowers. The government has filed an affidavit in the Supreme Court stating that it is ready to waive interest on the interest of six months of the moratorium period. However, the benefit of this interest waiver will be available only on loans up to two crore rupees. Apart from this, those who have paid the arrears from March to August will also get the benefit of interest waiver on interest.
The government will bear the burden of interest waiver
In the affidavit filed in the Supreme Court by the Finance Ministry, it has been said that the government will continue the tradition of supporting small borrowers. According to the affidavit, the government will bear the burden on banks due to the waiver of interest or compound interest on interest. The government has said that Parliament’s approval will be taken for this.
Who will be benefitted?
Consumer Durable loan
Credit Card Due
Personal loan of professionals
All loan waiver will cost 6 lakh crores
The Finance Ministry has stated in the affidavit that if the interest of all types of loans for the moratorium period is waived, then it will cost six lakh crore rupees. This will lead to a big reduction in the total net worth of banks. According to the Ministry, if the loan of an individual is more than Rs 2 crore, then he will not get the benefit of interest waiver on interest.
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Bankers say that the waiver of interest on the interest under the Centre’s scheme will cost between five and six thousand rupees. If the loan waiver of interest is given to all categories of borrowers, then it will cost up to 15,000 crore rupees. Bankers say that the central government can compensate this interest waiver as part of its social welfare measures.
No clarity on who gives EMI in Moratorium
However, there is no clarity in the Finance Ministry affidavit about any benefit for those paying EMI or credit card dues during the moratorium period. The central government has decided to waive interest on interest, reversing the recommendations of the committee headed by former CAG Rajiv Maharishi. This committee recommended not to waive interest on interest.
RBI provided moratorium facility in March
In March, the Reserve Bank of India (RBI) facilitated the Moratorium (deferment in loan payments) for three months in March due to the economic impact of the Corona transition. It was initially implemented for three months from 1 March to 31 May. Later RBI extended it for three months and extended it till 31 August. That is, a total of six months moratorium facility was given.