PremiumThe Indian government will waive “interest on interest" charges for loans of up to 20 million rupees ($273,000) during its six-month repayment moratorium because of the pandemic, The Times of India reported, citing a finance ministry affidavit to the Supreme Court on Friday.
The new waiver will benefit small borrowers, and will include those who have cleared their dues, for a range of loans made between March and August, the report said. The government will bear the burden of the money lost by banks because of the waiver, the finance ministry said in the affidavit.
The compound interest will be scrapped for loans taken out for purposes including education, housing and credit-card dues, the report cited the ministry as saying.
The Reserve Bank of India had allowed borrowers to seek a six-month moratorium on loans but banks and housing finance companies were imposing charges on both the principal and the interest, which translated into the repayment period being extended by more than six months.
