SC wants FinMin, RBI to meet in 3 days to decide on waiver of interest charged during moratorium

The Supreme Court, on Friday, asked the Finance Ministry and the Reserve Bank of India to hold a meeting within three days to decide on the waiver of interest for deferred payments of instalments for loans during the moratorium period announced in wake of the coronavirus-induced lockdown.

The court was hearing a plea filed by a Agra resident on the issue. A bench of Justices Ashok Bhushan, SK Kaul and MR Shah said the question is not of waiver of complete interest for the entire moratorium period, but is limited only to interest charged on interest by banks.

Next hearing

It posted the matter for further hearing next week. During the hearing, the Bench said that it is trying to take a balanced view of the matter, and only wants that wider measures should be adopted. Solicitor General Tushar Mehta, appearing for the Centre, said that he had sought a meeting with the RBI.

The Bench said that if the RBI reply “goes much beyond the query posed by us, there will be a lot of opinions on it”.

Our query is very limited on whether there can be waiver of interest on interest, it said. It asked the Centre to file an affidavit after holding the meeting with the RBI on the decision taken. The Bench was hearing a plea filed by Gajendra Sharma, in which he has sought a direction to declare the portion of the RBI’s March 27 notification “as ultra vires to the extent it charges interest on the loan amount during the moratorium period, which creates hardship to the petitioner being borrower and creates hindrance and obstruction in ‘right to life’ guaranteed by Article 21 of the Constitution of India”.

Sharma has also sought a direction to the government and the Reserve Bank of India (RBI) to provide relief in repayment of loan by not charging interest during the moratorium period.

Seeks FinMin reply

On June 4, the top court had sought the Finance Ministry’s reply on waiver of interest on loans during the moratorium period after the RBI said it would not be prudent to go for a forced waiver of interest, risking the financial viability of the banks.

The top court had said there are two aspects under consideration in this matter – no interest payment on loans during the moratorium period and no interest to be charged on interest.

It had said that these are challenging times and it is a serious issue as on one hand moratorium is granted and on other interest is charged on loans.

On May 26, the top court had asked the Centre and the RBI to respond to the plea challenging levy of interest on loans during the moratorium period.

The RBI, in its reply, has told the top court that it is taking all possible measures to provide relief with regard to debt repayments on account of the fallout of Covid-19, but it does not consider it prudent to go for a forced waiver of interest, risking the financial viability of the banks it is mandated to regulate, and putting the interests of the depositors in jeopardy .