The Supreme Court of India today has issued notice to the Centre and the RBI on Plea challenging charging of interest on loan after a 3 months moratorium granted by RBI and which is being extended till August 31.
The Petitioner Gajendra Sharma Challenges charging interest on loans after RBI ordered a three-month moratorium on the payment of EMIs till May 31 which has now been extended till August 31, 2020.
The plea has termed this unconstitutional, as during the lockdown, people’s incomes have already shrunk and they are facing financial hardships.
Solicitor General Mr. Tushar Mehta appeared on behalf of Union of India said that “RBI is yet to respond”.
Sr Adv Rajiv Dutta appearing on behalf of petitioner says that “3 months were given first which is now being extended by 6 months. When Supreme Court decides this matter, the accounting can be done. Today, please give me relief. Don’t penalise me today. Don’t add my interest and start charging compounded interest”.
The Supreme Court three Judges Bench comprised of Justice Ashok Bhushan, Justice Sanjay Kishan Kaul & Justice M.R. Shah heard the matter, whereby it says that “Let the RBI respond”.
The Court granted one-week time for the Reserve Bank of India to reply on the aforesaid issue.
The petitioner in the case has moved the Supreme Court in the capacity of a borrower aggrieved by the notification issued by the Reserve Bank of India (RBI) on March 27 wherein the Central Bank permitted all term loan to grant a moratorium of three months on payment of instalments.
The portion of the notification, which allows for charging of interest on the loan amount during the moratorium period, sought to be challenged by the petitioner and the Bench of Supreme court on 8th May comprising Justices Ashok Bhushan, Sanjay Kishan Kaul, and BR Gavai took up the matter via video conferencing, where it sought a response from the Centre and the RBI with regard to levying of interest on the loan amount during the moratorium period.
The petitioner in his plea submitted that at a time when the lockdown is in effect, charging of interest on the loan despite the moratorium period is causing people “hindrance” and is obstetrical in the “right to life” guaranteed to the people under Article 21 of the Constitution of India.
On March 27, the RBI had permitted all lending institutions to allow a three-month moratorium on payment of all kinds of instalments, including those for credit cards and for all term loans outstanding between March 1, 2020 and May 31, 2020. A similar three-month deferment for all working capital loans to help borrowers face Coronavirus-related economic hardships was also permitted.
The Supreme Court in its order passed on April 30 had asked the RBI to ensure that it’s loan moratorium policy permitting exemption from paying EMIs and other loans during the COVID-19 lockdown period is implemented by the banks.
-India Legal Bureau