New Delhi:
The central government of India has decided to waive interest on interest during
the six-month moratorium on loans up to two crore rupees. The government has
issued a statement that most vulnerable Indian citizens will benefit because of
this waiver. Earlier, the banks had argued that interest on interest waiver during
moratorium period will simply defer the interest to a future date but not
completely waive the interest on the loans. Individuals and MSME’s will
undoubtedly benefit from this new decision but it is predicted that the banks
will lose a substantial amount of money if the interest on interest during moratorium
between March and August is to be waived. Some say that the current decision by
the Indian government will push banks to the brink of total collapse.
The Finance
Ministry of India said in the statement that MSME loans, housing loans,
educational loans, personal loans to professionals, consumption loans, credit card
dues, auto loans and consumer durable loans will come under the decision. As
the public might welcome the ministry’s decision, it might result in great
losses for Indian banks which might render them helpless.
