Supreme Court announces interest waiver for small borrowers

Ahead of the festival season, the Finance Ministry announced waiver of interest on interest for loans up to Rs.2 crores. The move comes in the backdrop of Supreme Court’s direction to implement the interest waiver scheme, which is likely to cost the exchequer ₹6,500 crores.

The apex court on October 14 directed the Centre to implement “as soon as possible” interest waiver on loans of up to Rs.2 crores under the RBI moratorium scheme in view of the COVID-19 pandemic saying the common man’s Deepavali is in the government’s hands.

For starters, the scheme is aimed at refunding the compound interest on loans that accumulated during the six-month moratorium period from March 1, 2020, to August 31, 2020.

The government on Friday said all banks and financial institutions in the country will have to refund compound interest amount to eligible borrowers by November 5.

Who is eligible?

As per the guidelines, the scheme can be availed by borrowers who have taken loans not exceeding Rs.2 crore (aggregate of all facilities with all lending institutions) as of February 29. The RBI has included the following loans under the scheme:

MSME loans
Education loans
Housing loans
Consumer durable loans
Credit card loans
Automobile loans
Personal loans for professionals
Consumption loans

Who is not eligible?

Borrowers whose aggregate loans exceed ₹2 crore.
Agriculture and allied activity loans
Loans taken for buying tractors
Loans taken against fixed deposits, securities, property or gold
Non-performing assets