Interest waiver on Interest cost puzzling

The Govt has announced that interest on interest will be credited to the accounts who have paid EMI regularly .

If somebody has paid their EMI regularly and on time why would there be any interest on interest to begin with !!!! What scheme is this ?

Can the Govt please specify how much are they incurring in expense in this scheme? more  

The practice of interest waiver, loan mela, interest subvention, loan write off is a bad practice and politically motivated. By doing so, the health of Banking industry is being compromised. more  
Amit Mishra, Mr Abhijit sen has aptly clarified your doubts, Govt is just giving a level playing ground for honest EMI payers. more  
Mr Sen is correct. It was to help people who could not pay EMIs (basically for entrepreneurs/small and medium enterprises to reduce the pain of the loss of production and so on. it is only those who opted for the scheme of settlement, notified earlier. Let us be clear on this. Banks protested reduction of interest on interest; In order to main the fiscal discipline GoI has stepped in to compensate the interest waiver. Other countries have done it also, because there were no buyers/sellers. Take for instance the truck owners, (which comes readily to mind) had taken loans for the trucks from the banks purchase; Now when the truck is NOT running then the EMI becomes interest on interest. He will pay EMI only and the interest waiver would be allowed through banks or NBFFs. It is not as if some particular individuals have been given any favours; One thing is clear from this that, speaking rationally and economically, The government has not passed on the burden on the Banks NPAs, or what is known as "stressed Assets" which would bring down the Banks performances down by considerable amounts. We have NO other choice, but to bite the bullet. more  
It is a correct step as till now all honest payers be it tax or loan have been shortchanged. All subsidies ,freebies ,loan waivers .NPA write offs should be stopped forthywith.And it should include everybody including MPs ,MLAs ,corporators more  
Here is what I understood:

First about those who did not pay EMI for six months during lock-down period from April 2020 to September 2020. The lender (Bank or NBFC) would charge interest on the outstanding EMI to the customer. Now, the government will compensate these consumers by paying the interest part for the unpaid six EMI to the lender and the borrowers will not pay interest on delayed payment of EMI.

Here comes the notional loss for those who paid the EMI during the lock-down period. More than the financial loss, those who paid EMI on time during the lock-down period feel shortchanged as those who did not pay are compensated and those who made timely payment are left high and dry.

Hence, the government has decided to give a cash-back to these customers of the amount of interest on EMI if were not paid during lock-down period. In my humble opinion, this is a very rational step in encouraging fiscal discipline among borrowers. more  
Post a Comment

Related Posts

    • tax on electricity

      this issue has to be considered from the following angles: 1.whether the distributing cos are paying tax while purchasing electricity from the generating company. 2.are the distributing c...

      By Suresh Dasarathy
      /
    • INDIRECT LOOTING DUE TO PARKING AND OTHER CHARGES.

      We " feel " that we buy at cheaper rates at the Malls everywhere. However, they are looting us by means of parking charges and dearness / increased cost of food, clothing, apparels, house hold dome...

      By SHRIKANT SATHE
      /
    • Parking charges in malls

      Today I went for shopping in Phoenix mall. They calculate the charge for parking from the time of entry into the premises to the time we reach the exit gate, irrespective of the fact that it t...

      By Lakshmi Sundararajan
      /
    • ATM TROUBLES

      Many of the ATMs particlularly of Government owned banks such as SBI and KVB are faulty and problematic. The various problems encountered are as follows; - 7 out of 10 ATMs cannot dispense cas...

      By VIJAYKUMAR N
      /
    • Chinese made products rampant

      https://www.localcirc...

      By Naina Mittal
      /
    • District Consumer Forum

      In TOI 27 Oct 20 (page 5 mid way) there is a report announcing the introduction of ON LINE DISTRICT CONSUMER FOUM - www.edaakhil.nic.in. so...

      By Dilip Modi
      /
    • IPL ads

      I dont know who all is making money but the IPL ads are a disaster. Thumsup/Coke, Pan Masala, Condoms, Gambling and the list continues on and on. Why is the Consumer Affairs Ministry be...

      By Sneha Goyal
      /
    • Tussle for BIS

      It appears that the new Consumer Affairs Minister is trying to move BIS away from Consumer Ministry into Commerce Ministry. BIS is an inefficient lethargic and slow to act system and com...

      By Amit Mishra
      /
    • Ridiculous move by this consumer affairs dept and ppl paying

      Onion prices are 72 and it is ridiculous that the consumer affairs dept took onions out of the essential commodities act. Arent certain people benefitting from this clearly? LocalCircle...

      By Bharat Lal
      /
    • Approval system needed for every advertisement

      Consumer Affairs should create a as system where every television print or digital ad by a brand is approved by an ad regulatory body. They must have a benchmark that they must act within 3 busines...

      By Shikha Jain
      /
Share
Enter your email & mobile number and we will send you the instructions

Note - The email can sometime gets delivered to the spam folder, so the instruction will be send to your mobile as well

Please select a Circle that you want people to invite to.
Invite to
(Maximum 500 email ids allowed.)