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Monday, October 25, 2021

Interest pardon during moratorium! Supreme Court said – Central Government should give reply in 1 week


  • The next hearing of this case will be held on September 1.

The Supreme Court took cognizance of the alleged inaction of the central government on the issue of pardoning the loan installments, ie, the interest charged during the loan moratorium in view of the COVID-19 epidemic. Also, the top court directed that it should clarify its stand in this regard within a week. A bench headed by Justice Ashok Bhushan said that the Center has not clarified its stand on the issue even though it had adequate powers under the Disaster Management Act and is “hiding behind the RBI.” Tushar Mehta asked for a week’s time to file an answer, which was accepted by the top court.

Tushar Mehta said, “We are working closely with the RBI.” The bench asked the Solicitor General to clarify the stance on the Disaster Management Act and whether additional interest can be charged on the existing interest. The bench also comprises Justice R Subhash Reddy and Justice MR Shah. Mehta argued that there cannot be a common solution to all problems. Senior advocate Kapil Sibal, appearing for the petitioner, told the bench that the period of deferred installments of the loan would expire on 31 August and he demanded its extension.

Sibal said, “I am only saying that till these pleas are decided, the extension should not end.” The next hearing of the case will be on September 1. The bench said this while hearing the petition of Agra resident Gajendra Sharma. Sharma has said in his petition that in the Reserve Bank’s notification of March 27, the recovery of installments has been postponed, but the borrowers have not been given any concrete benefit in this.

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The petitioner has requested to give instructions to remove that part of the notification, in which interest is charged on the loan amount during the postponement period. By this, the petitioner, who is also a debtor, says that he faces difficulty. This hinders him in the guarantee of ‘right to life’ given in Article 21 of the Constitution of India.

The apex court had earlier said, “Once the adjournment has been set, it should fulfil its purpose.” In such a situation, we do not see any reason for charging interest over interest. “The apex court believes that it is not a question of completely exempting interest during the entire moratorium period, but in this case interest on interest paid by banks Is limited to the collection. The court said that it is a challenging time, in such a situation, it is a serious issue that loan installment payment is being postponed on one hand while interest is being charged on the other side.

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Shehnaz is a Corporate Communications Expert by profession and writer by Passion. She has experience of many years in the same. Her educational background in Mass communication has given her a broad base from which to approach many topics. She enjoys writing about Public relations, Corporate communications, travel, entrepreneurship, insurance, and finance among others.
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