The Supreme Court (SC) on Wednesday i.e. 26th August took exception to the Central government’s refusal to take an independent stance with regard to levy of interest by banks on loans in moratorium even after RBI (Reserve Bank of India) had announced the relief on borrowings between March and August owing to the COVID-19 outbreak.
An apex court bench, headed by Justice Ashok Bhushan, said that plight of people due to Covid-19 and the resultant nationwide lockdown restrictions should be considered by the Central government while taking a call on the issue and ordered the government to file a separate affidavit.
Earlier in June, RBI had filed an affidavit before the SC stating it would not support the move to waive off interest, as it will affect the financial viability of banks. Justice MR Shah, who was part of the bench, told SG (solicitor-general)Tushar Mehta, “You should make your stand clear instead of relying on RBI.”
Justice Bhushan said, “Government of India has ample powers under the Disaster Management Act, 2005, to take a decision. You should clarify two issues: whether interest can be charged and whether interest on interest can be levied.” The bench remarked, “The issue was created by your lockdown. Now, you cannot look into business (of banks) alone, but the plight of people should also be looked into.”
