Govt to bear interest on interest for small borrowers during moratorium

Any individual whose loan amount is less than Rs 2 crore will be eligible for waiver of the compounding of interest.

The government is ready to bear the burden of an interest waiver for small borrowers as the estimated impact of the move on the entire banking system would otherwise be Rs 6 trillion, the finance ministry told the Supreme Court on Friday.

“After careful consideration and weighing all possible options, the Union government has decided to continue the tradition of handholding the small borrowers. The government, therefore, has decided that the relief on waiver of compound interest during the six-month moratorium period shall be limited to the most vulnerable category of borrowers,” an affidavit submitted by the department of financial