The Supreme Court on Tuesday, 23 March, said that no direction can be issued to the Centre or the Reserve Bank of India (RBI) to announce particular financial packages or relief and that a waiver of complete interest during the moratorium period cannot be granted, reported Livemint.
However, the apex court added that no interest on interest or compound interest will be charged from any borrower during the loan moratorium period of six months, and denied an extension of the moratorium period.
Justice MR Shah, while reading out the verdict, said, “We have considered reliefs independently. Waiver of complete interest is not possible as banks have to pay interest to account holders and pensioners.”
“There shall be no interest on interest or compensation interest during moratorium period, irrespective of the loan amount. If any such amount has been collected it shall be refunded,” he added.
A bench headed Justice Ashok Bhushan was pronouncing its order on a batch of pleas by various trade associations, including those from real estate and power sectors, seeking an extension of loan moratorium in view of the COVID-19 pandemic.
The RBI on 27 March 2020 issued the circular which allowed lending institutions to grant a moratorium on payment of installments of term loans falling between 1 March and May 31 2020. Later, the period was extended till 31 August.
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