Can’t waive ‘interest on interest’ for all sectors: Centre tells SC

The Centre on Friday (October 9) informed the Supreme Court that it wouldn’t be possible on its part to waive the interest on compounding on various sectors, as it will seriously affect the banks and depositors.

“Policy is the domain of the government and court should not go into sector-specific financial relief. Any further relief, besides waiving of compound interest for loans up to ₹ 2 crore, is detrimental to the national economy and banking sector,” the Centre said in its latest affidavit to the top court.

The government last week had offered to waive the interest on the repayment of loans up to ₹2 crore, applicable for MSMEs, educational, housing, consumer goods and auto loans.

The Supreme Court in a hearing on Monday, however, said that it was not satisfied with the government’s offer to waive the “interest on interest” on loans up to ₹2crore frozen by the RBI up to six month moratorium in view of the COVID-19 pandemic.

The apex court, while hearing petitions on waiver of interest on delayed EMIs had told the Centre to reconsider its decision, keeping in mind the needs of real estate and power producers.

The Centre in its response had said that relief for specific sectors cannot be demanded through petitions.

The RBI in view of the coronavirus pandemic, had granted borrowers a six-month loan moratorium ending August 31.