India to forgo some interest charges on loans as part of COVID-19 relief

NEW DELHI, October 3 (Reuters) – The Indian government has told the Supreme Court it will waive certain interest charges on loans of up to Rs 20million ($ 272,888) as part of a COVID-19 support plan, a legal record showed, in a move that will bring relief to millions of borrowers.

An Indian optician in the northern city of Agra challenged the plan that allowed payments to be skipped for six months but charged additional “interest on interest” on deferred payments, which borrowers called unfair.

Other borrowers, such as real estate companies and electric utilities, have also challenged the plan.

In an Oct. 2 filing with the Supreme Court, seen by Reuters, the government said it had decided to forgo the compound interest component on small businesses and certain other loans related to education and housing, and credit card dues.

“The government bearing this burden would naturally have an impact on several other urgent commitments facing the nation, including bearing the direct costs associated with managing the pandemic,” the file added.

He did not estimate the impact of this move on the banking industry, but said that if he considered a full waiver of interest payments over a six-month period, as some had demanded, it would cost the sector 6 trillion rupees ($ 82 billion). .

Ganjendra Sharma, the Indian optician who filed the first case before the Supreme Court, applauded the decision.

“I am happy that millions of people won today,” he told Reuters. (Reporting by Aditya Kalra in New Delhi and Aftab Ahmed; editing by Himani Sarkar)

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