RBI, Finance Ministry To File Joint Response On Interest Waiver During Moratorium

The Supreme Court allowed the Finance Ministry and the Reserve Bank of India to file a joint response on a plea seeking interest waiver on loans under the central bank-mandated moratorium during the Covid-19 pandemic.

The RBI, in its response on Wednesday, argued that the purpose of the moratorium was not to grant an exemption to the borrowers from their payment obligations. Asking banks to forgo the interest will result in huge consequences for the banking system, it said.

The Supreme Court had on May 26 had asked the RBI to respond on the issue.

The petitioner, Gajendra Sharma, had told the court that levying interest on loans under moratorium defeats the move’s objective. While the government ceased work, it’s asking individuals to pay interest on loans during the moratorium period, the petition read.

The bench headed by Justice Ashok Bhushan said the economic aspect cannot be above the health of the people and that the case involves two key questions:

• The payment of interest during the period of moratorium.
• The levy on interest for non-payment of interest.

Solicitor General Tushar Mehta, who was present at the hearing, told the bench that he would seek instructions from the government and file a joint response on behalf of the RBI and the finance minister.

The petitioner informed the court that he will like to file a response to the government’s reply. The court adjourned the case and will take up the matter on June 12.