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Interest waiver will unsettle banks: Centre
Why is it in news?
- The Union government revealed that a blanket waiver of interest on debts incurred by all classes and categories of borrowers will unsettle banks.
- Centre replied in the Supreme Court.
Details:
- The Government had decided to waive compound interest on MSME and personal loans up to Rs 2 crore for the six-month period.
- The Supreme Court is hearing pleas made by big industries, real estate and power sectors and others for debt relief, including waiver of interest, during the moratorium.
Government's response:
- The blanket waiver of interest on debts incurred by all classes and categories of borrowers f would mean forgoing an estimated over ₹6 lakh crore.
- If the banks were to bear this burden, it would necessarily wipe out a substantial and a major part of their net worth.
- It will render most of the banks unviable and raise a very serious question mark over their very survival.
From Supreme court:
- The Supreme Court orally said it would not pass any order that would risk the economy going “haywire”.