Supreme Court pulls up Centre over interest on loans during moratorium

The Supreme Court on Wednesday pulled up the Central government and asked it to step up and take a stand over the issue related to charging interest on EMIs during the six month moratorium period granted in view of COVID-19 pandemic.

A three-judge bench headed by Justice Ashok Bhushan, and also comprising Justice Sanjay Kishan Kaul and Justice MR Shah was hearing a public interest litigation (PIL) filed by one Gajendra Sharma seeking a waiver of interest on loan repayments during the moratorium period.

The apex court asked the Central government and Reserve Bank of India to review the matter and slated it for further hearing in the first week of August. Indian Banks Association (IBA) to see if new guidelines can be brought in force for moratorium issue, the top court said.

Solicitor General Tushar Mehta, during the hearing today, said that the banks have to pay interest to depositors, and therefore waiving of interest is not easy.

Mehta said that the petition for waiver of interest during the moratorium period would risk the financial stability of the bank and will put the interests of the depositors in jeopardy.

The apex court told Mehta that the Central government has to step up and take a stand on the moratorium issue with respect to the charging of interest.

"You can't have a notification saying so and then step out of it. You took the time to answer this. What you are saying was said by RBI", the Apex Court said.

Justice MR Shah observed that once you (Centre) fix a moratorium it should serve the purpose you desire, we see no merit in charging interest on interest.

Earlier, the RBI had filed an affidavit before the apex court asking it not to allow the petition seeking a waiver of interest on loan repayments during the moratorium claiming it will incur a loss of approximately Rs 2 lakh crore.