The Supreme Court on Thursday reserved its verdict on the means relating to the extension of the moratorium period on loans. The pleas concerned the collection of interest on interest by banks on IMEs that were not paid by borrowers after taking advantage of the RBI’s loan moratorium program from March 1 to August 31 due to the COVID-19 pandemic.
The three-judge SC bench headed by Judge Ashok Bhushan heard petitions seeking interest relief during the six-month loan moratorium period. The pleas, filed with the Supreme Court, call for an extension of the moratorium on loans as well as a waiver of interest on EMI term loans during the six-month moratorium period.
Senior lawyer Ravindra Srivastava, representing industry bodies in Chhattisgarh, said the impact of COVID-19 is ongoing 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 must be a solution for the moratorium on loans and that the power cannot be left to the banks.
“Instead, RBI should arrange for process resolution,” he said.
“NDMA needs to collect empirical data and develop comprehensive policy, without claiming that there has to be a complete waiver. ), “Srivastava said.
At its previous hearing on December 16, the Reserve Bank of India (RBI) and the Indian Banks Association (IBA) urged the Supreme Court not to make further orders on the petitions seeking financial assistance.
The Reserve Bank of India (RBI) announced on March 27 a loan moratorium program, which allowed credit institutions to grant temporary relief on the payment of installments of term loans maturing between March 1, 2020 and May 31, 2020, due to the pandemic. Later, the moratorium was extended until August 31 of this year. The move was intended to give borrowers more time to pay IMEs amid the economic fallout from the nationwide lockdown caused by the COVID-19 pandemic, without being classified as bad loan.
Also Read: Comprehensive Interest Relief For Banks Costs Rs 6 lakh crore: Center Says SC
Also read: Moratorium on loans is a matter of fiscal policy, proactive measures have been taken: Center to SC
