Centre agrees to waive off interest for loans up to ₹2 crore

The Centre has agreed to waive off compounded interest for loans up to Rs 2 crore. The central government told the Supreme Court that it has agreed to waive interest on interest during the moratorium period (March to August).

People will get this relief on a loan of up to two crore rupees. This interest will be applicable for MSME, education, housing, consumer durables, cash, credit card dues, loans taken by professional and foreign currency.

In the previous hearing, the Supreme Court had told the Center that it would present some concrete plans for different areas. The court had expressed its displeasure at repeatedly postponing the case.

The government has said that this relief of that compound interest will not run on a loan of more than Rs 2 crore.

 The Center has filed an affidavit in the Supreme Court stating that the compound interest i.e. SME loan, educational, housing, consumer, auto, credit card dues, compounding interest applicable to professional and rival loans will be waived.

According to the government affidavit, interest will be waived on the loan interest of up to two crore rupees in 6 months loan moratorium time. The Center has said that in the time of a coronavirus pandemic, the government will bear the burden of interest waiver as it is the only solution. Also, the Center has said that permission will be sought from Parliament for suitable grants.

According to the government, this period can be extended to 2 years. The expert committee has also given its report on this.

On September 10, Tushar Mehta had said in court that he cannot waive interest, but will reduce the pressure of payment. Mehta had said that the banking sector is the backbone of the economy and no decision can be taken to weaken the economy.

The Supreme Court is listed to hear the case on October 5.

By Priya Kumari