Union Cabinet Agrees to Ex-Gratia Payment of 'Interest on Interest': Sources

The Union Cabinet on Wednesday discussed and agreed for ex-gratia payment of 'interest on interest', which will be communicated only to the Supreme Court since the matter is still sub-judice, sources told CNBC-TV18.

According to the proposal, the Centre will pay the difference between compound interest and simple interest. The proposal of ex-gratia payment of 'interest on interest' will be applicable for selective specified loans payable during the six months, sources said.

Last week, the Supreme Court had said that it was a “welcome move” on the Centre's part to waive compound interest on instalments of loans up to Rs 2 crore payable during the six-month moratorium period of March 1 to August 31 but frowned upon the over one-month time it sought to implement the decision.

A bench of Justices Ashok Bhushan, R S Reddy and M R Shah asked the government to speed up the process of implementation and said, "We welcome the Centre’s decision taken in the interest of the common man. We want it to be implemented expeditiously." Before arguments for the day were closed, Justice Shah said in a lighter vein, "Their (people's) Diwali is in your hands."