The government recently submitted a proposal where it agreed to waive the compounded interest or ‘interest on interest’ charges for MSME and personal loans during the moratorium period.

As per the Centre’s draft proposal, compound interest on fixed-term loans and equated monthly instalments (EMIs) will be waived — to the tune of Rs 2 crore — during the moratorium period.

The development comes as a huge relief for small-scale borrowers who had opted for the loan moratorium announced by the government from March 1 to August 31 in the wake of the economic devastation caused by the pandemic.

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