Supreme Court To Hear Fresh Plea For Extending Loan Moratoriums Till Year End
The Supreme Court stands in New Delhi, India. (Photographer: T. Narayan/Bloomberg)

Supreme Court To Hear Fresh Plea For Extending Loan Moratoriums Till Year End

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The Supreme Court on Friday decided to hear a fresh plea seeking and of extension the Reserve Bank of India’s moratorium scheme to provide facility of deferred payments of instalments of term loans to borrowers due to Covid-19 pandemic.

A bench headed by Justice Ashok Bhushan, in a hearing conducted through video conferencing, ordered tagging of the fresh plea filed by lawyer Vishal Tiwari with the earlier pending petition on the issue.

The RBI had come out with the notification in March after the nation-wide lockdown was imposed to curb the spread of the pandemic and had given the facility of deferred payment of instalments to borrowers and now, the scheme is ending on Aug. 31.

The lawyer told the bench, which also comprised Justices R Subhash Reddy and MR Shah, that the adverse impact of the pandemic over financial situation was still there and hence, the moratorium scheme needed to be extended further till year end.

Now, the plea will be heard alongside the one filed by Agra resident Gajendra Sharma which is scheduled for hearing on Sept. 1.

The apex court on Aug. 26 had heard Sharma's plea and had observed that the Centre was hiding behind the RBI and had asked it to reply within a week on the issue of interest being charged on instalments which have been deferred under the central bank's scheme during the moratorium period amid Covid-19 lockdown.

The apex court had earlier asked the Centre and the Reserve Bank of India to review the move to charge interest on EMIs during the moratorium period introduced under the scheme due to the Covid-19 pandemic.

The top court had said there was "no merit in charging interest on interest" for deferred loan payment installments during the moratorium period announced in wake of the Covid-19 pandemic.

Also read: Borrowers Who Stayed In Moratorium Round-2 Are Likely Restructuring Candidates: Axis Bank’s Rajiv Anand

Sharma 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 and said that it created hardship to the petitioner being borrower and creates hindrance and obstruction in 'right to life' guaranteed by Article 21 of the Constitution of India".

He has also sought a direction to the government and the RBI to provide relief in repayment of loan by not charging interest during the moratorium period.

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