SC rules against extension of loan moratorium

The Supreme Court on Tuesday said banks will not be allowed to charge any form of interest on loans of any size during a six-month moratorium period that ended on Aug. 31, 2020, but refused to extend the moratorium or interest waivers.

The top court said granting relief such as an interest waiver or extension of a loan moratorium can have far-reaching consequences for the economy.

It also said the government and central bank decide on economic policy based on expert opinion and that the court cannot be expected to have economic expertise, and thus cannot decide on the soundness of economic policy.

The Supreme Court was hearing a batch of pleas by various trade associations, including from real estate and power sectors, seeking extension of loan moratorium and other reliefs in view of the Covid-19 pandemic.

The Centre had earlier submitted before the top court that if it were to consider waiving interest on all the loans and advances to all categories of borrowers for the six-month moratorium period announced by RBI in view of the Covid-19 pandemic, then the amount foregone would be more than Rs 6 lakh crore.

More to follow...