Supreme Court Verdict in Loan Moratorium Case and refusal of extension of loan moratorium – Supreme Court Rules Complete Waiver of Compound Interest and refused to Extend Loan Moratorium. The supreme court has delivered the judgement in this regard. Delivering its judgement in the Loan Moratorium case, the Supreme Court ordered the complete waiver of compound interest of all borrowers.
Earlier, Reserve Bank of India (RBI) had not included the personal loan exceeding Rs 2 crore under the ambit of loan moratorium announced by the central bank. The top court has directed RBI that financial bodies must refund or adjust the penal interest for all borrowers.
However, citing that banks will have to pay interest to pensioners and account holders, top court said a complete waiver of interests could not be done.
Earlier petitioners in the loan moratorium case sought waiver from interest on interest against the EMIs that were not paid by them during COVID-19 pandemic while availing the loan moratorium scheme announced by the Reserve Bank of India last year.
Major Highlights – Extension of Loan Moratorium
- There will be no interest on interest or compensation interest during moratorium period irrespective of loan amount.
- Any such amount collected shall be refunded, the Supreme Court observed.
- There is no justification of not charging interest on interest for loans up to Rs 2 crore only. Even otherwise scheme granting waiver of compound interest has been considered. Govt has provided deferment of moratorium.
- If refund is not possible, the interest on interest collected shall be adjusted in the next installment payable.
- There must be additional measures taken to grant sector specific reliefs by RBI
- The Top court rejected extension of the period of moratorium.
- The apex court rejected extension of the period for invocation of resolution mechanism.
- The Supreme Court rejected sector wise reliefs provided by RBI.
- The Supreme Court rejected further reliefs over and above the packages already offered.