SC agrees to hear plea seeking interest waiver during moratorium period by RBI
The petition says no interest should be charged at all during the three-month moratorium as in the present circumstance the citizens are already facing 'extreme hardship' and also the entire market has crashed
The Supreme Court on Friday agreed to hear the plea seeking interest waiver for RBI prescribed three-month loan moratorium from paying EMIs and other loans amidst the nationwide lockdown due to Covid-19.
The petition has been filed by Gajendra Sharma and Senior Advocate Rajiv Dutta appeared on his behalf through videoconferencing before a three judge bench.
The three judge bench comprising Justices Ashok Bhushan, Sanjay Kishan Kaul and BR Gavia allowed the petitioner to serve the copy of the petition to counsel of Union of India.
Solicitor General Tushar Mehta sought time to seek instructions on the plea filed, the court granted him the time sought.
The case will be listed after two weeks as per the order uploaded on the Supreme Court website.
As per petitioner, during the three-month period the interest would continue to accrue which ultimately the customer would have to bear it. The petitioner argued that no interest should be charged at all during the three-month moratorium as in the present circumstance the citizens are already facing “extreme hardship" and also the entire market has crashed. The petition also stated that paying an additional interest on top of the regular EMI would be more difficult.
As per the 27 March RBI circular, banks and other financial institutions are permitted to provide a moratorium of three months for all term loan installments which are due for payment between 1 March and 31 May. Term loans will include all kinds of retail loans such as vehicle loan, home loan, and personal loan, agricultural term loans as well as crop loans. The central bank has clarified that credit card dues will also be eligible for the moratorium. The moratorium will be provided for both interest as well as principal repayment, which means the moratorium is on your entire EMI.
Moratorium basically means you don't have to pay your EMIs for that time period and no penal interest will be charged. It is not a concession of any kind and is simply a deferment of the payment to provide some relief to borrowers facing liquidity issues.
Karan Mitroo, Partner, L&L Partners told Mint, While the RBI has granted a moratorium on interest, waiver of interest, though may be a positive step for the borrower's, would have a very negative impact on banks and NBFCs which are already stressed on account of COVID. Hence, as a middle path, what may be considered is deferring such interest payments into staggered installments over the life of the loan instead of making these payable in a bullet installment at the end of the moratorium. This should provide enough flexibility to borrower's to make such payments, while at the same time safeguarding the interest of the banks and NBFCs.”
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Business NewsNewsIndiaSC agrees to hear plea seeking interest waiver during moratorium period by RBI
First Published:8 May 2020, 07:23 PM IST
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