Indian banks say government interest waiver will add to costs, spark litigation

By Nupur Anand

MUMBAI (Reuters) – Indian bankers fear the government’s decision to waive some interest payments on loans under a COVID-19 support plan will create unnecessary work for lenders and lead to more litigation, without providing much of a boost for the sagging economy.

In an Oct. 2 filing with the Supreme Court, seen by Reuters, the government said it is amending a controversial clause in a relief plan that allowed distressed borrowers to skip repayments for six months but then charged them “interest-on-interest” on the delayed payments, putting them deeper in debt.

The change will waive the compounded interest component on small business loans and some personal debts from March to August.

The government will bear the cost, which could be as high as $1 billion, according to analysts.

But for Indian lenders saddled with over $120 billion of bad loans and a coronavirus-induced collapse in demand, the

Read More

Top India Court Asks Government to Outline Interest Waiver Plans

(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.



a large clock tower towering over a city at night: A metro train travels along an elevated track as residential buildings stand in the background at night in the outskirts of New Delhi, India, on Sunday, July 7, 2019. India's new Finance Minister Nirmala Sitharaman resisted calls for a fiscal boost to spur a weakening economy, sticking instead to a plan to narrow the budget deficit over time by keeping spending in check.


© Bloomberg
A metro train travels along an elevated track as residential buildings stand in the background at night in the outskirts of New Delhi, India, on Sunday, July 7, 2019. India’s new Finance Minister Nirmala Sitharaman resisted calls for a fiscal boost to spur a weakening economy, sticking instead to a plan to narrow the budget deficit over time by keeping spending in check.

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.

Loading...

Load Error

Prime Minister Narendra

Read More