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Loan moratorium: SC begins hearing on interest waiver case

Pleas, filed before SC, seek an extension of loan moratorium as well as waiver of interest on term loan EMIs during six-month moratorium period

twitter-logoBusinessToday.In | November 18, 2020 | Updated 12:14 IST
Loan moratorium: SC begins hearing on interest waiver case
The three-judge SC bench led by Justice Ashok Bhushan, is expected to pass a formal order in the case today

The Supreme Court hearing on the loan interest waiver case has started. Petitioners, including builders, power producers, realtors, had moved the apex court seeking relief in terms of interest rate charged by banks and NBFCs. The SC could today decide whether these petitioners will get any relief or the matter will be put to rest. These batch of petitions relate to charging of interest on interest by banks on EMIs (equated monthly installments) not paid by the (loan) borrowers who availed of the RBI loan moratorium scheme.

The pleas, filed before the top court, seek an extension of the loan moratorium as well as waiver of interest on term loan EMIs during the six-month moratorium period. During its previous hearing on November 5, the SC had deferred the matter to November 18.

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

The three-judge SC bench led by Justice Ashok Bhushan, is expected to pass a formal order in the case today. The RBI and the Finance Ministry have already filed separate additional affidavits in the apex court saying that the banks, financial and non-banking financial institutions will credit into the accounts of eligible borrowers by November 5 the difference between compound and simple interest collected on loans of up to Rs 2 crore during the moratorium scheme period.

Also Read: Banks told to credit 'interest on interest' to borrowers, RBI tells SC

Prior to this, the central government had told the apex court that lenders had been asked to credit into the accounts of eligible borrowers the difference between compound and simple interest.

On October 14, the apex court had observed the Centre should implement "as soon as possible" the interest waiver on loans of up to Rs 2 crore under the RBI's moratorium scheme and had said that the common man's Diwali is in the government's hands.

The matter pertains to the RBI's March 27 circular, which allowed lending institutions to grant a moratorium on payment of installments of term loans falling due between March 1, 2020, and May 31, 2020, due to the pandemic. The moratorium was later extended until August 31 this year.

Also Read: 'Not possible to give more relief, no extension of loan moratorium': Centre tells Supreme Court

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