The Centre has agreed to waive off compounded interest for loans up to Rs 2 crore, frozen by the Reserve Bank of India (RBI) in a six-month moratorium granted because of the coronavirus pandemic, the government has told Supreme Court in an affidavit. The Centre also said it will consult SEBI on whether companies can be given relief on credit rating downgrades for moratorium period.
The interest waiver will be applicable for loans taken by MSMEs (Micro, Small and Medium Enterprises), for educational, housing, consumer goods and auto loans and for credit card dues.
In the affidavit, the government stated, "Under pandemic conditions, the only solution is for the government to bear the burden of waiving of interest."
The Centre will also seek the Parliament's permission for grants to enable the move, it stated.
For the categories specified by the government, the waiver on interest will be irrespective of whether the borrower has availed of the moratorium.
Meanwhile, the Finance Ministry has said waiving off interest on loans to every category would amount to a burden of ₹ 6 lakh crore for banks.
The case will be taken up again on Monday.