Centre commits to waive 'certain interest' on loans, tells SC

Centre commits to waive 'certain interest' on loans, tells SC
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New Delhi: Bringing reprieve for borrowers, the central government has told the Supreme Court that it will waive certain interest levies on loans up to Rs 2 crore under the six-month moratorium granted to cope with the COVID-19 lockdown.

In a filing on October 2 with the Supreme Court, the government said it had decided to waive the compounding interest component on small-business and some other loans related to education and housing, and credit card dues.

"The government bearing this burden would naturally have an impact on several other pressing commitments being faced by the nation, including meeting direct cost associated with pandemic management," the filing added.

The case will be taken up again on Monday.

The pleas in the apex court had raised issues pertaining to validity of RBI's March 27 circular which allowed lending institutions to grant moratorium on payment of instalments of term loans falling due between March 1, 2020 and May 31 this year due to the pandemic. Later, the period of moratorium was extended till August 31.

The Centre had earlier told the court that waiver of interest on deferred EMIs during moratorium period would be against the basic canons of finance and unfair to those who repaid loans as per schedule.

RBI has however come out with a scheme which provides for extension of moratorium for two years to certain stressed borrowers, the Centre had informed the top court.

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