JOIN USMoratorium must not result in higher interest on loans, says Supreme Court
The Supreme Court on Friday said a meeting should be held between officers of Ministry of Finance and the RBI within three days to settle the issue of charging interest on interest accrued to a loan during the period of moratorium.
A bench of Justices Ashok Bhushan, Sanjay Kishan Kaul, and M R Shah said that the loan repayment moratorium should not lead to a higher interest rate being charged.
"If interest payment has been deferred for three months, banks should not add that amount to the payable money and charge interest on interest," the bench said.
Solicitor General Tushar Mehta said a meeting would be held between Finance Ministry and RBI this weekend. He sought time for taking instructions.
"We are doing the balancing. Our concern in these proceedings is only whether the interest that has been deferred for three months will be added to charges payable later and whether there will be interest on the interest," the bench said.
Meanwhile, the SBI and Indian Banks Association also approached the court seeking hearing in a PIL filed by Gajendra Sharma.
They said all the banks were of the view that interest can't be waived off for a period of six months.
The court put the matter for consideration on Wednesday, June 17.
Earlier, the RBI has told the court that its decisions granting a moratorium on loan repayment was only to "defer the payment obligations and it cannot be construed to be a waiver".
Circulars were issued on March 27, April 17, and May 23 by the RBI for an initial three-month moratorium period on loan repayment which now stood extended till August 31. The measure was announced as a relief to the people after the nationwide lockdown was imposed since March 25 to contain the COVID-19 pandemic.