Interest waiver by Centre fails to benefit the borrower
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The waiver of the difference between simple interest and compound interest for six months implemented by the central government failed to help borrowers. For loans of 30 lakhs, the waiver received shall be less than Rs 1800. For loans of 50 lakhs, the loan holder shall receive a waiver of less than Rs 3000.
The amount set apart by the government to distribute the interests waived is 6500 crores. This has been no reduction in interest for the six months when the moratorium was announced for repayment of loans. A reduction of interest would cost the government 1.5 lakh crores.
All banks hadn't implemented the moratorium of six months. Some gave borrowers 1-2 months for repayment. For how many ever month the instalments got stalled, they had to be repaid together. When repayments got charted alternatively, the monthly instalments got higher.
It is believed that banks imposed moratorium from the March 1st to August 31st. There has been no reduction in the principal amount of interest in the period. It is only the compound interest upon the total interest that has been waived.
Housing loan, education loans, credit card dues, auto loans, MSME loans, consumer durable loans, and consumption loans under 2 crores are covered under the scheme. Under the scheme, the difference between compound interest and simple interested shall be credited in the accounts of borrowers by November 5th irrespective of whether they availed the moratorium partially or fully at all.