The Supreme Court on Thursday sought the finance ministry’s response on Reserve Bank of India’s regulatory package charging interest rate on loans even during the three-month moratorium period declared amid the coronavirus pandemic and the extended lockdown, PTI reported. This came a day after the central bank said it is neither prudent nor appropriate to go for a forced waiver of interest on loans by risking the financial viability of banks.
A bench of Justices Ashok Bhushan, Sanjay Kishan Kaul and MR Shah said that these are unprecedented and challenging times as on one hand moratorium is granted and on other hand interest is being charged on loans.
The top court was hearing a petition filed by a borrower, Gajendra Sharma, who said though there was a moratorium on loans, there was also accrual of interest. This had to be paid in bulk or monthly once the central bank lifts the moratorium period. Sharma, a resident of Agra, sought a direction to the Centre and the Reserve Bank of India to provide relief in repayment of loan by not charging interest during the moratorium period.
Solicitor General Tushar Mehta, representing the Centre, sought time to consult the finance ministry.
Meanwhile, Advocate Rajeev Dutta, appearing for the petitioner, said the central bank’s focus is on the profits. He referred to the recent order of the top court on keeping the middle seat empty in flights, saying that economic interest is not higher than the health of people.
Dutta said that RBI’s submission indicated that only bank’s should earn profit while the rest of the country goes down during the coronavirus pandemic.
The matter will be heard next on June 12.
In its reply to the petition, the RBI said its regulatory package introduced amid the lockdown was “in its essence in the nature of a moratorium deferment and cannot be construed to be a waiver”. It added that the moratorium was permitted to mitigate the burden of debt servicing brought about by the pandemic to ensure continuity of viable businesses.
The central bank said the March 27 circular announcing moratorium was later extended till August 31 on payment of all installments.