The Supreme Court has rescheduled the hearing of petitions seeking an extension of loan moratorium period beyond six months or waiver of the interest on interest to Wednesday. The Apex Court was supposed to start the proceedings at 12 pm. The apex court has to go through a total of 24 cases to consider, before arriving at the interest waiver case out of which only 1 case is left.
Today, the hearing was postponed due to the unavailability of the bench after lunch.
The Central Government on October 10, filed an affidavit in the Supreme Court on waiving the interest on interest. The Centre informed any waiver of interest on interest or compounding will have to entail significant economic costs which cannot be deadened by any bank without a serious dent of their financials. “It will also have huge implications for broader financial stability and depositors,” the affidavit stated. “Petitioners should not seek any more interest waivers”, the Centre also said to the Supreme Court
On October 5, SC had asked RBI to file KV Kamath’s panel suggestions and their decisions on loan moratorium on the issue.
The decision came after the Finance Ministry agreed to waive compound interest (interest on interest) charged on loans of up to Rs 2 crores for a six-month moratorium period announced due to the COVID-19 pandemic.
In the wake of the novel Coronavirus, the RBI on March 27, 2020, introduced moratorium rate, said all lending institutions, including banks and housing finance companies, will have to give their borrowers a three-month moratorium on term loans, period between March 1 and May 31, 2020. The EMI moratorium was extended for 3 additional months in August on term loan ending on August 31.
