Quality of mercy

1 min read . Updated: 23 Mar 2021, 11:00 PM IST Livemin

Yet, needing to pay interest on the deferred interest may have been a shock to the indebted, given how ungenerous this would make the moratorium

The Supreme Court on Tuesday rejected appeals for an extension of the moratorium on loan repayments granted after covid hit our economy last year. It also turned down pleas for a waiver of interest obligations during the forbearance period. But pleaders did not go away empty-handed. The court ruled that banks must charge no levy on the held-off interest component, the compounding effect of which would otherwise have lumped borrowers with an even larger bill to clear. This takes off at least some of the liability from their shoulders.

Overall, the court order is pragmatic. Banks simply can’t afford to have repayments kept in abeyance for too long. It’s their business to earn off loans, and they must be allowed to resume before they run short of money, which would create a crisis for our entire economy. As for interest, it’s part of every loan deal, and debtors would surely have known it can’t be escaped before they availed of a payment deferral. Yet, needing to pay interest on the deferred interest may have been a shock to the indebted, given how ungenerous this would make the moratorium. It should not have taken a judicial order for relief to be offered on this.