Scheme for Compound Interest Waiver to Take Effect by November 5: Centre tells Supreme Court

Centre informs SC about implementation of the scheme  

Three weeks after filing an affidavit in the Supreme Court, the Centre has informed the Supreme Court that the benefit of compound interest waiver promised by it for small borrowers was taken after detailed deliberations and considerations and will be given effect by November 5. 

At its last hearing on October 14, the Court had asked the Centre and RBI to give a concrete answer as to when the scheme will be implemented. The Supreme Court turned down the Centre’s request for a month to implement a scheme to ensure that borrowers with loans of up to ₹2 crore won’t have to bear compound interest on the interest dues accruing on their loans during the moratorium period. 

The apex court, which had been hearing petitions seeking an extension of the six-month moratorium granted by the RBI on loan repayments, had given the Centre time till November 2 and said: “the common man’s Diwali is now in the government’s hands”. 

Scheme to cover eight categories of eligible beneficiaries

There are eight categories of eligible beneficiaries for this scheme and the difference between the compound interest and simple interest computed for these beneficiaries for the period between March 1 and August 31 will be credited back to them. 

The lending institutions can then claim the reimbursement of this amount credited to borrowers from the Central government through the nodal agency, which is the State Bank of India. 

RBI and Centre file affidavits on debt restructuring  

Earlier, the RBI and the Centre had, in separate affidavits, gave details of the steps taken by them to give relief to borrowers in the wake of the pandemic and the economic effect of it. 

One of the steps taken by the government was to provide compound interest waiver to small borrowers. 

The other aspects will be heard by Court on November 2.