Government Forms Panel To Assess Waiver Of ‘Interest On Interest’
Water falls from a fountain as the North Block of the Central Secretariat buildings, which houses the Ministries of Finance and Home Affairs, stands illuminated at night in New Delhi, India. (Photographer: Anindito Mukherjee/Bloomberg)

Government Forms Panel To Assess Waiver Of ‘Interest On Interest’

The government has set up a panel to assess the waiver of interest, and interest on interest on loans under moratorium during the Covid-19 pandemic.

The panel was formed after concerns were raised when a batch of petitions were filed in the Supreme Court, seeking relief from interest levy on loan repayments deferred during the six-month moratorium mandated by the Reserve Bank of India. The panel will submit its report within one week.

The panel will be chaired by former Comptroller and Auditor General Rajiv Mehrishi, and will have Ravindra Dholakia, former professor at IIM Ahmedabad; and B Sriram, former managing director of State Bank of India; as members.

The Reserve Bank of India had permitted banks to grant a moratorium on term loans to help soften the economic blow of the Covid-19 outbreak. The moratorium, which was initially for a period of three months till May 31, was later extended till Aug. 31.

The terms of reference of the panel are:

  • To measure the impact of waiver, and interest on interest on Covid-19 related moratorium on the economy and India’s financial stability.
  • Suggest mitigating financial constraints of various sections of society, and measures that need to be adopted.

The panel was announced on Sept. 10 evening hours after the Supreme Court gave the government and Reserve Bank of India upto Sept. 28 to file their views before issuing its order.

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