The Supreme Court (SC) on Wednesday said there is no merit in burdening customers, who have opted for the RBI-approved loan moratorium, with additional interest.
The SC bench, while hearing the plea challenging the levy of interest on loan repayments during the moratorium, said the government cannot “leave everything to be decided by banks”.
“Govt should consider interfering,” the bench comprising Justices Ashok Bhushan, MR Shah and SK Kaul said.
“Once you fix a moratorium it should serve the purpose desired..we see no merit in charging interest on interest,” the bench added.
During today’s hearing in the matter, Solicitor General Tushar Mehta explained that moratorium means deferment and that waving interest is a difficult task for banks as they also have to pay interest to depositors.
“Problem is that even banks have to pay interest to depositors. Therefore waiving interest not easy,” Mehta said.
But Justice Bhushan said that the “deferred” amount should stay as it is while it is under moratorium. He meant to say that additional interest should not be charged during the moratorium months.
The RBI has announced an optional 6-month moratorium for customers towards fixed-term loans and EMI payments. The moratorium period ends on August 31.
Senior Advocate Harish Salve, representing banks, told SC that the issues will have to be tackled on a sector-to-sector basis and that the interest waiver petition is “premature”.
“We are still in a tunnel. Let’s wait till we come out of this tunnel.” Salve said on behalf of banks.
While Justices Kaul and Bhushan heard all the concerns, they again reiterated that their concern is related to charging of “interest on interest” for those who have opted for the moratorium.
“We are only saying provide the waiver on interest on interest,” said the bench.
In conclusion, the bench asked the government to interfere in the matter soon and find a way to waive off additional interest during the moratorium.
The matter will be heard next in the first week of August.
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