Relief news for micro, small and medium industries (MSMEs) and individual borrowers. The central government told the Supreme Court that it has agreed to waive interest on interest during the moratorium period (March to August). These reliefs can be found on loans up to two crore rupees.
Interest waiver will be applicable for loans taken by MSMEs and educational, housing, consumer durables, autos, credit card arrears, professionals and consumers. The government said in an affidavit to the Supreme Court that the government will maintain a tradition of helping small borrowers. In the time of coronavirus epidemic, the burden of interest subvention will be borne by the Government and permission from Parliament will be sought for the appropriate grant.
Hearing in the Supreme Court on October 5 last week, the Supreme Court had adjourned the hearing on two PIL against taking interest on loan interest during the lone moratorium period for October 5, i.e., Monday. During the last hearing, senior advocate Rajiv Dutta had said that the central government has not been able to take any concrete decision in the matter. Therefore, the Centre was asked to submit some concrete plan for various sectors.
The financial position of banks may worsen
Earlier, the RBI had told the Supreme Court that it is taking all possible measures to provide relief in the payment of debt instalment in view of the Coronavirus epidemic. But forcing interest waiver does not seem to be the right decision because it may worsen the financial health of the banks. The bank’s depositors may also suffer.
The Reserve Bank, while replying to a plea challenging the imposition of interest during the ban on instalment payment, had said that its regulatory package, a moratorium, is of the nature of the ban, should not be treated as an apology or exemption.
Solicitor General Tushar Mehta, who appeared in the court on behalf of the central government, had earlier said, “The banking sector is the backbone of our economy, we cannot take any decision which can weaken the economy. We have decided not to waive the interest but the pressure of payment will be reduced. ‘