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New Delhi: While those who opted for the six-month moratorium on loans are likely to get relief from the government in terms of exemption from compound interest (interest on interest) during the moratorium period, if the Supreme Court accepts the government’s proposal , there is confusion among borrowers who did not avail themselves of the six-month moratorium.
The Finance Ministry is reportedly exploring options such as cash back for individuals and MSMEs with debts of up to Rs 2 million and who did not opt for the moratorium to ensure a level playing field with those who availed themselves of the moratorium. .
“It is possible to calculate the notional value of the benefit that a borrower would have received if he had opted for the moratorium. The government can pass this on to those who paid their dues on time. It would be unfair to ignore those who have been paying their fees, despite the difficulties, ”said the Times of India he quoted a government source as saying.
However, the details have yet to be worked out as the government is still awaiting the final number of borrowers who opted for the moratorium. The full exercise will only be carried out if the Supreme Court accepts the proposal of the Ministry of Finance to waive “interest on interest.”
Officials said there were a large number of people availing themselves of the moratorium throughout the six-month period, but there were also some borrowers who used the facility for only a limited period of time, including delaying their EMIs for a few days. . “It is a complex calculation and the government does not have all the numbers at this point, especially of all the NBFC and the housing finance companies,” said the ToI report quoted a source as saying.
The publication quoting Anil Gupta, vice president of the rating agency Icra, mentioned that the government can provide relief to those who have made payments on time by reducing a theoretical amount of “interest on interest” of their outstanding principal.
According to Gupta, if the government transfers the benefit to all retail borrowers and MSMEs who have loans of up to Rs 2 million, then it can cost the government between Rs 5,000 to 7,000.
According to the bankers, the profit will carry over after making changes to their software. “In case the repayment is in equivalent monthly installments (EMI), banks may have to create an application to implement the relief. The effect of the moratorium was an extension of the mandate (maintaining the same EMI) or a higher EMI (maintaining the same mandate). His interest in interest relief will be reflected in the reduction of the number of installments or a slightly lower EMI for the same period, ”the publication quoted IDBI Bank deputy director Samuel Joesph Jebaraj as saying.
