The Supreme Court on Monday will resume the hearing over a batch of pleas requesting a waiver of interest charged by banks on EMIs during the RBI’s six-month loan moratorium period. A bench headed by Justice Ashok Bhushan had asked the government in mid-October to implement the decision to waive compound interest payment charged on loans of up to Rs 2 crore for the six-month moratorium period announced in the wake of the COVID-19 pandemic by November two.
Simultaneously, the Reserve Bank of India (RBI) had notified the Central government’s scheme of interest waiver during the moratorium period and had asked all lending institutions to do the needful.
“All Primary (Urban) Cooperative Banks/State Cooperative Banks/District Central Cooperative Banks, All India Financial Institutions and All Non-Banking Financial Companies (including Housing Finance Companies) to be guided by the provisions of the scheme and take necessary actions within the stipulated timeline therein,” the RBI wrote in its recent affidavit.
These developments in the court are supposed to be leaning favourably towards financiers and might be positive for the sector as no discussions took place on the expansion of the scope of relief to other categories or to interest waiver. Further, a waiver on the compounding of interest would benefit small borrowers which constitute around 40% of the bank credit.
