Supreme court hearing on plea seeking interest waiver on six-month loan moratorium announced by RBI to begin shortly
The Supreme Court (SC) on August 26 heard a plea seeking interest waiver for six months during the loan moratorium period granted by the Reserve Bank of India (RBI). SC will only consider waiver of interest for the deferred interest portion. The Central government was expected to clarify its stance on the issue of waiving interest.
A bench led by Justice Ashok Bhushan directed the Centre to file a response to the plea seeking waiver of interest. The apex court adjourned the hearing to September 1.
Also read: RBI's annual report: Moratorium, loan restructuring may impact banks’ health
The RBI had in March announced a moratorium on repayment of term deposits for three months, which was later extended till August 31. The move was intended to provide borrowers relief during the COVID-19 pandemic.
SC observations:
> RBI's position will confuse the issue further. The Centre must clarify its position under the Disaster Management Act (DMA). Why has the government not clarified its position?
> Ample powers are available with the government under DMA. tHE Centre must clarify its position on waiver of interest, waiver of interest on interest.
> Government should not think about only business, should also think about plight of people. Stand of RBI so far is aligned with concerns of the the industry. Justice Ashok Bhushan said the government seems to be hiding behind the RBI.
Solicitor General Tushar Mehta to SC:
> RBI as a regulator is the one will take a position. RBI is now saying that there can't be a one size fits all solution. RBI is looking to identify stressed accounts, and then provide relief in terms of lower interest rate. SC should not make such observations, will be distorted and reported.
The RBI had on June 4 said lenders will lose Rs 2 lakh crore if interest is waived during the moratorium period.
The SC has previously said there is "no merit in charging interest on interest".