Waive off one month’s bank interest on loans, suggest experts

Thursday, 2 April 2020 00:20 - - {{hitsCtrl.values.hits}}

Private sector experts are suggesting that the best help for businesses and individuals who have been economically hit by the multiple weeks’ partial shutdown owing to the COVID-19 pandemic is complete waiver of a month’s interest on their borrowing.

The reason being almost all businesses hadn’t been able to generate any revenue owing to the haphazard shutdown, as opposed to a clear and definite, specified number of days of shutdown as has happened elsewhere.

With more business likely to be lost owing to continuity of measures to curtail the spread of the novel coronavirus, experts say waiver of a month’s interest on the borrowings will be a big initial relief.

With the Central Bank estimating total lending at Rs. 8 trillion, experts said based on an average of 10 or 12% interest rate, the monthly interest component would be around Rs. 60-80 billion. This move, they argued, works better as opposed to deferring capital and interest repayment for six months as announced last week, since businesses and individuals will have a heavier burden to pay extra later on, even if income levels don’t recover.

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