The Centre on Tuesday (September 1) told the Supreme Court that loan moratorium period can be extended by two years as per the Reserve Bank of India’s circular. On waiving interest during the moratorium period, the government said the Centre, RBI and bankers association should be allowed to sit together to resolve the issue.
Solicitor General Tushar Mehta told a bench of Justices Ashok Bhushan, R. Subhash Reddy & MR Shah that as different sectors were undergoing stress, it was imperative that stakeholders sit together and decide on the interest issue.
The top court has posted the matter for Wednesday as it did not get the affidavit by the Centre stating its stand is yet to reach the judges.
The court had last week sought the government view on waiving interest on loan repayments during the moratorium, saying it “cannot hide” behind the RBI. The moratorium period allowed by the RBI ended on Monday.
The RBI had informed the court earlier that there cannot be an interest waiver during moratorium on term loan repayment as such a move will put the financial health and stability of banks at risk.
The Supreme Court was hearing a PIL for waiving of interest on interest for deferred payments of installments of loan during moratorium period.
The bench was hearing a plea filed by an Agra resident Gajendra Sharma, who has sought a direction to declare the portion of the RBI’s March 27 notification as ultra vires to the extent it charges interest on the loan amount during the moratorium period, creating hardship to the petitioner being borrower and create hindrance in “right to life” guaranteed under Article 21 of the Constitution.
As per the debt servicing relief earlier announced by the RBI, interest will continue to accrue on the outstanding portion of the term loans during the moratorium period. Deferred installments under the moratorium will include payments falling due from March 1, 2020 to August 31, 2020.
The banks have recommended a loan restructuring scheme which helps borrowers to the extent that they can delay repayment of interest and principal amount, or repay loans at easy terms and conditions. These measures help address their immediate revenue losses.