Loan Moratorium

The plea urged the apex court to direct that no bank or financial institution will take action for auction in respect of any property of any citizen or person or party or anybody corporate for a period of six months.

The recent resuscitation move by the Reserve Bank of India may not be enough to help small businesses stay afloat. A petition filed in the Supreme Court wants a fresh moratorium on interest on bank loans.

The petition has sought directions to the respondents to permit the lending institutions to grant interest-free moratorium period for term loan and defer the payment of loan instalments for a period of six months or till Situation from COVID 19 Normalizes.

In a verdict that balances business and consumer interests, the Court ruled that there would be a waiver of compound interest on loans from March 1 to August 31, 2020 due to Covid-19.

The Supreme Court said, the loan moratorium period will not extend beyond August 31, recovery of compound interest from borrowers… court refuses to interfere in loan moratorium policy.

The bench had reserved the verdict on December 17 last year after hearing the petitioners, the Centre, RBI and intervenors.

The advocate of the petitioner, Vishal Tiwari had sought the modification of original prayers in the petition which associated with the extension of the moratorium period up to December 31.

The main issues that came up were that the limited relief in waiving compound interest till Rs 2 crore was not enough in addressing the pain of the small time entrepreneurs who have lost all in the pandemic.

New Delhi (ILNS): Solicitor General Tushar Mehta today told the Supreme Court that the government will ensure that those who paid up during the moratorium period are not short-changed. Will ensure those who paid during moratorium aren't short-changed.

The loan moratorium case will now be heard by the Supreme Court on Thursday. This was decided after the Central government informed the court that their lawyer, the Solicitor General, was busy with some other matter.