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Loan moratorium 'extendable' up to 2 years: Govt to SC

Govt is in process of identifying distressed sectors to vary benefits as per the impact of hit they have taken due to COVID-19, said Solicitor General

twitter-logoBusinessToday.In | September 1, 2020 | Updated 13:02 IST
BREAKING: Loan moratorium 'extendable' up to 2 years: Govt to SC
SC said that it will hear and decide tomorrow the bunch of petitions

Centre and RBI through Solicitor General Tushar Mehta on Tuesday informed the Supreme Court that the moratorium on repayment of loans is extendable to 2 years. "We are in the process of identifying the distressed sectors to vary benefits as per the impact of hit they have taken," Mehta said.

The SC said that it will hear and decide tomorrow the bunch of petitions demanding waiver of interest, or waiver of interest on interest on the suspended EMIs during moratorium period.

The moratorium scheme, which was introduced by the government to provide relief to borrowers from coronavirus pandemic, ended on August 31.

On August 26, the apex court had observed that the Centre was "hiding behind the RBI" and had asked it to reply within a week on the issue of interest being charged on instalments which have been deferred under the central bank's scheme during the moratorium period amid COVID-19 lockdown.

Meanwhile, the apex court had earlier asked the Centre and the Reserve Bank of India (RBI) to review the move to charge interest on EMIs during the moratorium period introduced under the scheme due to the COVID-19 pandemic.

The top court had said there was "no merit in charging interest on interest" for deferred loan payment installments during the moratorium period announced in wake of the COVID-19 pandemic. One Agra resident Gajendra Sharma, in his plea before the SC, had sought a direction to declare the portion of the RBI's March 27 notification "as ultra vires to the extent it charges interest on the loan amount during the moratorium period and said that it created hardship to the petitioner being borrower and creates hindrance and obstruction in ''right to life'' guaranteed by Article 21 of the Constitution of India".

He has also sought a direction to the government and the RBI to provide relief in repayment of loan by not charging interest during the moratorium period.

Also read: Deadlock over loan moratorium extension?

Also Read: RBI fears moratorium to take a toll on banks' financial health

Also Read: Shaktikanta Das hints RBI may announce further rate cuts, measures to tackle COVID-19

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