SC rejects pleas to extend 6-month loan moratorium period offered by RBI

Supreme Court today rejected the pleas from various trade associations and corporate bodies to extend the six-month loan moratorium period offered by the Reserve Bank of India. A Bench comprising Justices D Y Chandrachud, M R Shah and Sanjiv Khanna pronounced the judgment on the loan moratorium and waiver of interest. A Bench headed by Justice Ashok Bhushan had earlier reserved its verdict on the batch of pleas on December 17 last year.

 

The SC said no direction could be issued to the govt or the RBI to announce any particular financial package or relief, and held that it could not issue directions to provide relief to particular sectors over and above others.  The apex court directed that there should be no interest on interest or penal interest on any amount during the loan moratorium from any



borrower.

 

Justice Shah observed that Pandemic affected all sectors and govt had to take measures such as providing transport to migrants, etc. Even govt had no support during Pandemic and even GST loss that was incurred. The Court has considered reliefs independently. Waiver of complete interest is not possible as banks have to pay interest to account holders and pensioners.

 

It may be noted that the Reserve Bank of India (RBI) had on March 27, 2020 announced a moratorium on loan instalments due between March 1 and May 31. The moratorium period was later extended by three months till August 31, 2020. The moratorium was intended to provide borrowers relief during the COVID-19 pandemic, enabling them to defer payments on EMIs.