Waive compound interest on loans up to Rs 2 cr for six-months

The Centre has agreed in the Supreme Court to waive compound interest (interest on interest) charged on loans of up to Rs 2 crores for a six-month moratorium period announced due to the COVID-19 pandemic in a relief to individual borrowers and medium and small industries.

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Key-Points

The government will seek due authorization from Parliament for making appropriate grants in this regard.

The endeavour shall be over and above the support of 3.7 lakh crore rupees to MSMEs, 70,000 crore rupees for home loans already extended through the Garib Kalyan and Atmanirbhar packages announced by the government earlier.

The government has decided that the relief on waiver of compound interest during the six-month moratorium period shall be limited to the most vulnerable category of borrowers.

This category of borrowers, in whose case, the compounding of interest will be waived, would be MSME loans and personal loans of up to two crore rupees.

The loans were categorized into eight categories by the government including MSME (Micro, Small and Medium Enterprises), education, housing, consumer durable, credit card dues, auto, personal, and consumption.