November 01, 2019
The Majlis has approved a bill to abolish compound interest on bank loans that matured by last Now Ruz.
The extra interest charges would be eliminated to encourage debtors to repay their bank loans by mid-February 2020.
The Majlis Research Center, the influential research arm of the parliament, has said many manufacturers have either closed or are on the verge of insolvency due to the burden of bank liabilities. Over the years they were neither able to repay their debts nor allowed to apply for new loans to remain afloat.
Compound interest is interest calculated not only on the amount of the principal outstanding, but also on the accumulated interest due on the loan.
Simple interest, on the principal alone, would still be owed.
The Research Center acknowledged that the new law will reward deadbeat banking customers.
