In a big move that augurs well for small borrowers, the government in its affidavit submitted to the Supreme Court said that it supports the waiver of compound interest for loans under moratorium for certain categories.
Government in its affidavit stated that it has decided to continue the “tradition of handholding the small borrowers” and therefore, it has waived interest for the said period for the most “vulnerable category of borrowers”
Borrowers To Benefit – Check Listing
MSME loans up to Rs 2 cr, Education loans up to Rs 2 cr, Housing loans up to Rs 2 cr, Consumer durable loans up to Rs 2 cr, Credit card dues up to Rs 2 cr, Auto loans up to Rs 2 cr, Personal loans to professionals up to Rs 2 cr And Consumption loans up to Rs 2 cr will be eligible.
Any individual/entity whose loan amount is more than Rs 2 crore will not be eligible for waiver of the compounding of interest, which shall be confined to only the above referred categories of borrowers.
The waiver on interest will be irrespective of whether the borrower has availed of the moratorium.
Government said the cost of waiving off interest on loans to every category would amount to a burden of Rs 6 lakh crore for banking system.
The submission comes ahead of the hearing on October 5.