SC notice to Centre against interest charged on loan

SC notice to Centre, RBI against interest charged on loan during moratorium

The Supreme Court on Tuesday (May 26) asked the Centre and RBI to respond to a plea questioning the RBI notification allowing banks to charge interest on the loan amount during the three-month moratorium period, which now stood extended till August 31.

A bench of Justices Ashok Bhushan, Sanjay Kishan Kaul, and M R Shah issued notice to the Union government and the banking regulator on a petition filed by Gajendra Sharma.

Senior advocate Rajeev Datta, appearing for the petitioner asked the top court to declare March  27 notification issued by the RBI as ultra vires to the extent it allowed charging of interest on the loan amount during the moratorium period on EMI repayment. He said the people's income has already shrunk during the period of lockdown due to the COVID-19 pandemic.

"This creates hardship in the present scenario of the complete national lockdown being extended from time to time due to the COVID-19 outbreak," the petitioner contended.

He further contended imposition of interest during the loan moratorium will defeat its very purpose and take away its benefit.

"This has caused hindrance and obstruction in “right to life” guaranteed by Article 21 of the Constitution in furtherance of the right to life including right to livelihood which is a pre-requisite to the fundamental right guaranteed under Article 21 to people of India," his plea stated. 

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