Interest during the moratorium waived

Why is it in news?
  • The Government has told the Supreme Court that it has decided to waive compound interest on MSME and personal loans up to Rs 2 crore for the six-month period.
Details:
  • The waiver would be applicable to MSME loans and personal loans up to Rs. 2 crore.
  • The categorisation includes education, housing, auto, consumption and consumer durable loans, personal loans to professionals and credit card dues of up to Rs 2 crore.
Significance:
  • This is a big relief to MSME and personal loan borrowers.
  • However, borrowers will have to pay the interest on their outstanding loans for the moratorium period they opted for.
  • Banks won’t add that interest component to the principal outstanding at the end of the moratorium to calculate fresh EMI at current interest rate.
Posted by Jawwad Kazi on 5th Oct 2020
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