The Supreme Court on Thursday reserved verdict on pleas relating to extension of loan moratorium period. The pleas pertained to charging of interest on interest by banks on EMIs which have not been paid by borrowers after availing the loan moratorium scheme of RBI during March 1 to August 31 in view of the COVID-19 pandemic.
The three-judge SC bench headed by Justice Ashok Bhushan was hearing petitions seeking interest waiver during the six-month loan moratorium period. The pleas, filed before the apex court, seek an extension of the loan moratorium as well as waiver of interest on term loan EMIs during the six-month moratorium period.
Senior lawyer Ravindra Srivastava, representing Chhattisgarh industry bodies, said the impact of COVID-19 is continuous and many people are still suffering financially. This is a case where the National Disaster Management Authority (NDMA) should have come out instead of handing over the burden to the banks, he said.
He further stated that there has to be a solution for loan moratorium and that the power cannot be left to the banks.
"Instead RBI should be making provisions for resolution of processes," he said.
"NDMA has to collect empirical data and make a comprehensive policy, not arguing that there needs to be a complete waiver. There can be a partial waiver also but for this, there is a need for a calibrated policy under the Disaster Management Act (DMA)," Srivastava said.
During its previous hearing on December 16, the Reserve Bank of India (RBI) and Indian Banks Association (IBA) had urged the apex court not to pass any further orders on petitions asking for financial aid.
The Reserve Bank of India (RBI) had on March 27 announced a loan moratorium scheme, which allowed lending institutions to grant a temporary relief on payment of installments of term loans falling due between March 1, 2020, and May 31, 2020, due to the pandemic. Later, the moratorium was extended till August 31 this year. The move was intended to provide borrowers more time to pay EMIs amid the economic fallout due to COVID-19 pandemic-led nationwide lockdown, without being classified as bad loan.