SC adjourns hearing on loan moratorium as RBI seeks time to file affidavit

The Supreme Court adjourned the hearing till September 28 on the two petitions seeking an extension of the moratorium period on repayment of loans and to waive off the interest on the interest on loan amount in view of Covid-19 pandemic.

The apex court ordered that all decisions taken by the RBI, the Government of India or the banks be placed before it for consideration. RBI sought time to file the affidavit.
 

The Supreme Court had last week said that those accounts that had not been declared non-performing assets (NPAs) as on August 31 should not be declared bad loans until the case was disposed of. 

The decision came days after the Centre and the Reserve Bank of India (RBI) informed the Court that the moratorium on repayment of loans could be extendable to up to two years under certain conditions and that sectors most distressed by the economic slowdown were being identified.

The petition, filed by lawyer Vishal Tiwari, sought directions, till the court reopens, to all the banks to adhere to extend the moratorium period for lawyers/ service sector, transport and tourist industry, including drivers and other covered under these sectors and defer their EMI payment on term loans. It also sought that in case, such acts are committed by the lending Institutions then, strict action shall be taken against them in accordance with the law.

"The emergence of the Covid-19 pandemic in India has brought a drastic financial difficulty along with the health disaster that is going on in this country. Various people have lost jobs during this situation of biological emergency and various professionals and others have gone through real financial hardship," the plea said.

It also sought that in case, such acts are committed by the lending Institutions then, strict action shall be taken against them in accordance with the law.

Meanwhile, the Centre had argued that the waiver of interest on deferred EMIs during the moratorium period would be against the basic canons of finance and unfair to those who repaid loans on schedule. Solicitor General Tushar Mehta, appearing for the Centre and the RBI, told the Bench headed by Justice Ashok Bhushan that the moratorium period on repayment of loans amid the Covid-19 pandemic was extendable by up to two years.

"A waiver of the interest on interest during moratorium would also be against the basic canons of finance," the Centre had said in its affidavit.