Congress asks govt to withdraw order reducing interest rates on small saving schemes

The Congress on Wednesday said the government's decision to reduce interest rates on small saving schemes was a "fatal blow" to the economic security of depositors and sought its withdrawal.

The party also said the government should waive off interest on EMIs of the salaried middle class and MSME borrowers for three months from March.

In a statement, party leader Jaiveer Shergill said the government's notification reducing interest on small savings during lockdown was "rubbing salt on the wounds of depositors".

He said the government has issued a "warrant of interest income cut" hurting "the most vulnerable sections of the society at the worst possible time".

Noting that the decision will adversely impact various sections including the middle class, lower-middle class, farmers, pensioners, and women, he said the interest rate cut will hurt the "already shrinking savings" and reduce the income of about 90 crore individuals who have deposited Rs 14 lakh crore in various small saving schemes.

He said the income of people was down due to the crisis created by coronavirus, "saving investment avenues were down, the market is down, employment is down".

"Now the BJP by bringing down the interest income has given a fatal blow to the economic security of the depositors," he said.

The Congress leader said that the total combined reduction in income of depositors is Rs 26,000 crores annually due to reduced rates of various saving instruments.

He also said the BJP government's move of three-month 'EMI moratorium' was merely a postponement of EMI payment and interest.

"It exposes the borrowers to additional interest on deferred EMI payment and rather allows the banks to levy interest on interest (existing principal amount and accruing interest) ultimately squeezing the pocket of the borrowers," he said.

Shergill said the government should waive off for at least three months' interest on the loans availed.

"Ensure that the loan amount outstanding on March 1, 2020 is the same as on July 1, 2020 by waiving off three months interest," he said.