SC directs RBI to ensure its moratorium circular is implemented in its letter and spirit

The Supreme Court on Thursday directed the Reserve Bank of India (RBI) to ensure that its circular on three-month moratorium on loan repayment between March 1 and May 31 is implemented in its letter and spirit as it appears that the banks are not extending the benefit to the borrowers.

The apex court told Solicitor General Tushar Mehta, appearing for Centre, that it appears that the benefit given by the RBI is not been extended to the borrowers.

The plea was made that since the March 27 circular was not being implemented in its letter and spirit, it should be set aside.

However, a bench of Justices N V Ramana, Sanjay Kishan Kaul and B R Gavai, which took up as many four PILs related to RBI circular through video conferencing, said since the petitioners are not aggrieved parties therefore it is not interfering with the circular.

“… we direct the Reserve Bank of India to ensure implementation of the Circular dated March 27, 2020 in its letter and spirit,” the bench said, in its order in one of the PIL filed by Kamal Kumar Kalia.

During the hearing, the bench asked petitioner’s advocate Saju Jacob that how much loan did the petitioner had taken as none of the aggrieved person have come forward.

The counsel replied that he is not involved in any loan and is only a PIL petitioner.

The bench said that there has to be an aggrieved party as it is a policy decision and meant for those, who have taken a loan.

Mehta replied that the circular applies to the borrowers and urged the court to direct for consideration of PIL as representation to the RBI.

The bench said that there should be some guidelines so that the benefit is extended to the borrowers by the banks.

The bench refused to entertain three other PILs related to the March 27 circular after finding that none of the petitioner has taken loan and is aggrieved party.

On March 27, RBI had issued slew of measures to check financial impact of the nationwide lockdown and had issued a circular giving liberty to all banks and financial institution to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, subject to the borrower making such a request.

It had said that repayment schedule for such loans as also the residual tenor would be shifted across the board by three months after the moratorium period.

Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period, the RBI had said.