Interest on loans in moratorium: Supreme Court gives Centre, RBI more time to reply

New Delhi (ILNS): The Supreme Court today gave the Centre and the Reserve Bank of India more time to place their decisions on record regarding the issue of waiver of interest on the suspended EMIs during the moratorium period. The court will hear the matter next on October 5.

A three-judge bench of Justices Ashok Bhushan, R. Subhash Reddy and M. R. Shah issued the direction while hearing petitions demanding waiver of interest on the suspended EMIs during moratorium period. 

During the hearing today, Solicitor General Tushar Mehta apologised to the bench for not submitting the affidavit on behalf of the government saying that the government is at a very advanced stage in its decision making process. The court had last time asked Mehta to submit an affidavit detailing all the steps to be taken by Ministry of Finance and RBI on the issue. 

The apex court on its previous hearing on September 3 had directed the banks to not declare those accounts as a non-performing assets (NPA) for two months which were not NPA’s as on August 31.

The Court in a day-long hearing had heard arguments on the question of interest to be charged on interest and the powers of the Centre and the NDMA under the Disaster Management Act to provide relief on aspect of loan repayment during Covid pandemic.

On March 27, a circular was issued by the RBI, allowing banks to grant a moratorium to borrowers on payment of instalments for a period of three months, which was later extended to six months, in the wake of the Covid-19 pandemic and the subsequent lockdown. The RBI had clarified that the interest on these loans for this period would be payable. Petitions were filed challenging the circular to the extent of interest being charged as their monthly EMI payment will stand increased as a result.

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