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SC pulls up Centre for charging interest on loans even during moratorium period declared for Covid

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New Delhi: The Supreme Court today slammed the Centre for not taking a stand on allowing moratorium on charging of interest on loans as well as interest on interest during the moratorium period declared during pandemic.

“You cannot be interested only in business and not about sufferings of the people,”

commented the bench of Justices Ashok Bhushan, R. Subhash Reddy and M.R. Shah, while hearing a plea challenging the charging of interest on loans even after a three-month moratorium granted by the RBI and which has now been extended till August 31.

The bench further said that it appears that the Centre is hiding behind the RBI decision on this issue when it had ample powers under the Disaster Management Act to decide whether it could stop banks from charging interest on deferred EMIs and stop interest on interest for the moratorium period.

The bench accordingly directed the central government to file an affidavit within a week, stating its stand on moratorium on loan repayment, which expires on August 31. It has to decide whether interest can be waived or, whether it can stop charging interest on interest accrued during moratorium period.

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Solicitor General Tushar Mehta, appearing for the central government, submitted that the Centre is working in coordination with the RBI to ameliorate difficulties for those who have availed loans. He told the bench that the Centre’s stand cannot be any different than that of the RBI.

The matter has been adjourned for next hearing in September.

Read the order here;

Writ-Petition-Civil-825-2020-26-08-2020-1

– India Legal Bureau

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