The Supreme Court on Friday directed the government to make sure that all steps be taken to implement its decision to forego interest on eight specified categories of loans paid upto Rs two crore in view of the coronavirus pandemic.
This comes amid the havoc caused by coronavirus as it has not just affected and been a serious threat to health of people but also eclipsed the economic growth of not just India but countries throughout the world, and brought all the major economies at crossroads.
Timeline of the happenings:-
The RBI had on March 27 issued the circular which allowed lending institutions to grant a moratorium on payment of instalments of term loans falling due between March 1, 2020, and May 31, 2020, due to the pandemic. Later, the moratorium was extended till August 31 this year. The pleas pertained to charging of interest on interest by banks on EMIs which have not been paid by borrowers after availing the loan moratorium scheme of RBI during March 1 to August 31.
The judgement came on a PIL filed by Agra resident Gajendra Sharma seeking directions to declare the notification dated March 27, 2020 issued by Reserve Bank of India as ultra vires to the extent it charges interest on the loan amount during the moratorium period.
It may be recalled that in October, the Centre has informed the Supreme Court that lenders have been directed to credit in the accounts of eligible borrowers by November 5 the difference between compound interest and simple interest collected on loans of up to Rs 2 crore during the RBI’s loan moratorium scheme.
The Ministry of Finance has said that after crediting this amount, the lending institutions would claim reimbursement from the Central government.
In an affidavit filed in the apex court, the government has said that the ministry has issued a scheme as per which lending institutions would credit this amount in the accounts of borrowers for the 6-month loan moratorium period which was announced following the COVID-19 pandemic situation.
Under the scheme, all lending institutions (as defined under clause 3 of the scheme) shall credit the difference between compound interest and simple interest in the respective accounts of eligible borrowers for the period between March 1, 2020 to August 31, 2020, the affidavit said.
On October 14, the apex court had observed that 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.
Waiver on following types of loans:-
The Supreme Court on Friday heard petitions seeking interest waiver during the loan moratorium period. After the hearing, the apex court directed the government to forego interest on these eight specified categories of loan:-
· MSME (Micro, Small & Medium Enterprises)
· Education
· Housing
· Consumer durable
· Credit card
· Automobile
· Personal
· Consumption.
The bench which comprises Justices Ashok Bhushan, R Subhash Reddy and MR Shah will resume hearing the matter on December 2, when it will most likely conclude the hearing.
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