Loan moratorium: SC asks RBI to examine if benefits being passed on to borrowers

Tribune News Service

New Delhi, April 30

The Supreme Court on Thursday asked the RBI to examine if benefits of its policy decisions were being passed on to the borrowers.

“It appears that whatever benefits are being given by RBI, they are not being extended to the borrowers. There should be proper guidelines,” a Bench headed by Justice NV Ramana told Solicitor General Tushar Mehta during a hearing on petitions challenging the March 27 RBI circular on loan moratorium.

Issued as part of a Covid-19 relief package, the moratorium is a legal authorisation to debtors to postpone payment of EMIs.

The Bench — which asked the petitioners if they had taken any loan — refused to interfere in the matter after they replied in the negative.

“The RBI may examine it to see the circular issued on March 27 is being implemented by the banks effectively. This is not a PIL issue. However, due to the various issues raised, we request that RBI may examine whether its policy is being implemented in true letter and spirit,” the Bench said

Mehta assured the court that it would be considered by the RBI.

Several PILs in the Supreme Court had challenged the March 27 Circular issued by the RBI to all banks and financial institutions to the extent it provided for recovery of interest accrued on the outstanding portion of the term loans during the moratorium period from March 2020 to May 2020.

“The State cannot enrich itself nor permit anyone to enrich from the unfortunate situation by charging interest for moratorium period,” one of the petitioners, advocate Amit Sahni, had contended.

Most of the petitioners had sought a direction to all banks and financial institutions not to charge interest from their customers during the moratorium period in the larger public interest.     

They alleged that the RBI’s announcement was eyewash as it provided that the interest shall be chargeable during the moratorium period and the accumulated accrued interest shall be recovered immediately after the moratorium period got over.

In his petition, Sahni had pointed out that for a loan of Rs 30 lakh with a remaining maturity of 15 years, the net additional interest was almost Rs 2.34 lakh.

It would be unfair to permit banks and financial institutions to charge interest on the outstanding amount for the moratorium period, when the citizens cannot work to comply with the government’s instructions and were compulsorily incapacitated to generate funds.