SC on Loan Moratorium: The Supreme Court, while giving its verdict in the loan moratorium case, has given relief to the banks. At the same time, real estate and some other industries seeking relief have received a setback. The Supreme Court has said in its decision that interest cannot be completely waived. At the same time, the court has also refused to extend the loan moratorium period from 31 August onwards. Also said that interest cannot be charged on interest during these 6 months moratorium. If a bank has taken interest on the interest, then it will have to be returned, there will be no relief on it.
Explain that those who did not repay the loan installment during the 6 months due to exemption from repaying the EMI given during the Corona crisis, were not put into default. However, banks were charging interest on these 6 months of interest.
Government’s right to economic decision
The Supreme Court said that banks cannot completely waive interest as they are accountable to account holders and pensioners. The government has the right to take economic decisions. The government has also suffered huge economic losses due to the epidemic. The government has also received less tax due to the epidemic. Therefore, a complete apology on interest is not possible. We cannot give instructions to the government on the policy. A bench of Justices Ashok Bhushan, R Subhash Reddy and MR Shah has pronounced this decision.
Relief to banks
This decision has brought great relief to the banks. However, the real estate sector and some other industries, which are demanding an interest waiver, have received a setback. The court has ruled on the petitions of business associations of different sectors including real estate and power sector. In this, he sought other relief besides increasing the loan moratorium in the wake of the COVID-19 epidemic. On 17 December last year, a bench headed by Justice Ashok Bhushan reserved its decision after hearing the arguments of all the parties.
Loan Moratorium came into force on 27 March 2020
Explain that the RBI first implemented the loan moratorium on 27 March 2020. Under this, relief was paid from paying EMI from March 1, 2020 to May 31, 2020. However, later it was increased to 31 August 2020 by the RBI. The RBI filed an affidavit in the Supreme Court in September 2020, stating that extending the loan moratorium for more than 6 months would adversely affect the economy.
What was the plea of the central government?
In the last hearing, the Center had also told the court that if all classes are given the benefit of interest waiver, then the banks will have to bear a burden of more than 6 lakh crore rupees. If the banks have to bear this burden, then they will have to lose a large part of their net assets. In such a situation, most of the lending bank will suffer huge financial loss. Even the existence of some crisis will arise.