(Bloomberg) — India’s top court asked the government and banks how they plan to waive deferred interest on loans for small borrowers and whether similar relief measures could be provided to other sectors.
The Supreme Court on Monday asked lawyers from the government and Reserve Bank of India to submit information on the measures they plan to take on waiving some of the interest and recasting loans for stressed borrowers. The court will listen to this feedback on Oct. 13.
Prime Minister Narendra Modi’s government will pay the “interest on interest” on loans of as much as 20 million rupees ($273,000) for the duration of the Reserve Bank of India-authorized repayment holiday that ended on Aug. 31, according to an affidavit filed by the Ministry of Finance in the Supreme Court on Friday.
Groups of borrowers, including industry bodies for real estate and power producers, have approached the top court seeking a waiver on compounded interest and an extension of the repayment holiday.
Banks and home finance companies have been imposing charges on both the principal and the interest, which translated into repayment periods being extended by more than six months.
The waiver comes after the Supreme Court asked the Modi administration to assess the impact of the coronavirus pandemic on the economy and come up with proposals for relief measures.
The Reserve Bank of India has taken a number of