NEW DELHI: It is not just the Reserve Bank of India but even bankers and government officials are not in favour of waiving or offering interest concessions to borrowers who opt for the special loan moratorium facility.
Last week, the Supreme Court asked the finance ministry to look at the demand raised before it. The government is yet to firm up its stand on the matter.
Officials, however, said that interest should be levied on amount that has been lent since banks have also borrowed that amount from depositors who need to be paid. The moratorium, which is now available for six months starting March 2020, was meant to provide some temporary relief to borrowers – both individuals and companies – in case they were facing a cash crunch due to the coronavirus pandemic.
Bankers said that a waiver would upset the payment culture especially because a majority of the borrowers had not opted for the moratorium and were continuing to repay their instalments.
On its part, as several states offered farm loan waivers and reliefs, the Centre has maintained a stance that such moves impact the overall payment culture and those who are paying on time are at a disadvantage. As a result, it has offered incentives to farmers repaying loans on time.
Sources said that the RBI has allowed borrowers to spread the interest accrued so that the amount can be amortised over the tenure of the loan instead of the payment being in one shot.
Some of the borrowers are, however, unhappy with the scheme as the loan tenure goes up by more than six months since interest is charged during this period. Typically, new borrowers or those with a longer loan tenure will have to pay more, prompting banks also to advise customers against opting for the facility.
In its reply, RBI had told the apex court that it would not be prudent to waive interest during the moratorium period which has been extended up to August 31. The regulator said that a waiver would “risk the financial viability” of banks and put the interests of depositors in “jeopardy”.