InvestorQ : What could be the actual shape of the final judgment on EMI moratorium and interest on interest, which is the disputed subject?
vidhya Laxmi made post

What could be the actual shape of the final judgment on EMI moratorium and interest on interest, which is the disputed subject?

Answer
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sarah Leo answered.
7 days ago


The Supreme Court has taken its own time to come to a final view but that should be visible in the next few weeks. For the time being, based on the submissions by the government to the SC, it looks like the interest on accrued interest during loan moratorium could just go.

This would encompass all forms of retail loans and MSME loans for the time being. As per the government confirmed details, retail loans like home, education, auto, personal and credit card debt of up to Rs.2 crore will qualify for relief, apart from most MSME loans.

While the government had agreed to bear the interest on interest, it had not given any time bound plan. Therefore, on 14 October the Supreme Court directed the government to prepare an action plan on the waiver since it had already agreed to waive the interest on interest to reduce the burden on individual and retail borrowers.

It is roughly estimated that the waiver will cost the government close to Rs.7200 crore or near about $1 billion. The actual numbers are awaited and that will only be known after all the banks confirm the actual liability from their side.

However, the government is clear that this is a sympathy arrangement and not a right. Hence, this benefit will only be restricted to the most vulnerable categories of borrowers and will not be made available to everyone.

The government, RBI and the Supreme Court have already confirmed that the standard interest levied on loans will continue to be payable by the customer. This may have accrued over the last six months and the accumulated amount will have to be defrayed.