Exemption from paying compound interest, how many people will benefit ?, the report claims.

Mumbai, 26 October 2020 Monday

More than 40 per cent of loans taken from banks and financial institutions and 75 per cent of borrowers will benefit from the decision to provide relief from compound interest. So, this decision will increase the burden on the exchequer by about Rs 7,500 crore. That is stated in a report. The government had told the Supreme Court last Friday that it would waive compound interest on loans up to Rs 2 crore. Under this, banks will be provided the amount of the difference between compound interest and plain interest. He said that all the borrowers will get this facility.

Then whether or not to take advantage of the moratorium. But the condition for this is that the loan installment should be paid by the end of February i.e. the loan concerned is not a non-performing asset (NPA). "This type of loan is 40 percent of the loans provided by the institutional system (banks, financial institutions)," Crisil said in a report on Monday. This will benefit 75% of the borrowers. While the government treasury will have to bear the burden of about Rs 7,500 crore. ”

It said that if the RBI had given the relief to the borrowers only due to the Kovid-19 epidemic, the burden on the exchequer would have been halved. The government has asked banks and financial institutions to add funds to the accounts of eligible borrowers by November 5. This amount will be equal to the difference between compound interest and plain interest during the six-month relief period.

According to Crisil, the burden on the exchequer would have been Rs 1.5 lakh crore if eligible loan holders with loans up to Rs 2 crore had been exempted from all types of interest, including compounding. This would have created problems on the economic front for the government and the financial sector. Rebate schemes include MSMEs (micro, small and medium enterprises), education, housing, credit cards, vehicles, personal loans, business and consumer loans.