SC on Loan Moratorium LIVE Updates: Apex court says interest waiver not possible, can't allow moratorium extension

A Supreme Court bench comprising of three judges said providing complete interest waiver and extension of moratorium will have consequences for the economy.

The Supreme Court has pronounce its judgment on a batch of pleas related to the six-month loan moratorium period, stating that it cannot allow waiver of complete interest and extension of the moratorium.

· Petitioners will not be eligible for waiver of interest on interest, extend moratorium period, or sector specific reliefs.

· There is no justification for waiving compound interest only on loans of up to Rs 2 crore. There shall be no interest on interest or compensation interest during moratorium period, irrespective of the loan amount. If any such amount has been collected it shall be refunded.

· Justice Shah said: "Courts are not advisers to the executive on matters of economic policy. Pandemic affected all sectors and govt had to take measures such as providing transport to migrants, etc. Even govt had no support during Pandemic and even GST loss that was incurred." (Inputs from Bar & Bench)

· Justice Shah said: "We have considered reliefs independently. Waiver of complete interest is not possible as banks have to pay interest to account holders and pensioners".

· "What is an economic policy or what will be financial package be will be decided by the Centre and RBI after detailed consultations."

· "From various steps taken by Centre and RBI, it cannot be said that centre has not taken steps in backdrop of COVID19."

· Courts are not advisers to the executive on matters of economic policy. Pandemic affected all sectors and govt had to take measures such as providing transport to migrants etc. Even govt had no support during Pandemic and even GST loss that was incurred

A brief recap

· The Reserve Bank of India (RBI) had on March 27, 2020 announced a moratorium on loan instalments due between March 1 and May 31. The moratorium period was later extended by three months till August 31, 2020.

· The moratorium was intended to provide borrowers relief during the COVID-19 pandemic, enabling them to defer payments on EMIs.

· Also read: Banking Central | When will Supreme Court lift stay on NPA classification?

· The top court had in September 2020 ordered that accounts that were not non-performing assets (NPAs) as on August 31 should not be classified as NPAs until further orders.

· In October 2020, the central government announced waiver of compound interest charged during the moratorium period on certain categories of loans of up to Rs 2 crore.