Centre to waive ‘interest on interest’ during the moratorium on loans up to Rs 2 Cr

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The government has brought a huge relief for borrowers as they have presented to Supreme Court that it will waive interest on interest on loans up to Rs 2 crore during the period of a six-month of the moratorium amid the ongoing outbreak.

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This special interest waiver will be applicable for the loans that are taken by MSMEs, housing, consumer durable, auto, education, and other professional loans. ‘Under pandemic conditions, the only solution is for the government to bear the burden of waiving of interest,’ said Centre in the affidavit submitted on Friday.

However, the Centre had said earlier that there will be no waiving in interest as it would affect the entire banking system. But after some time, the government changed its stance and proposed this new solution to ease down critical conditions for the business owners and citizens.

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The Supreme Court has asked the Centre to prepare a concrete plan so that the borrowers can have maximum benefits from it. The further formalities will proceed on Monday. The mentioned relief in interest will be available to those categories that had availed of the moratorium. And, on the other side, any individual who is having a loan of more than 2 crores will not be eligible for this.

Published by Ishan Soni on 03 Oct 2020

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