PIL in SC questions RBI circular on loan moratorium

Tribune News Service

New Delhi, April 11

A PIL in the Supreme Court has 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,” petitioner advocate Amit Sahni contended.

Sahni 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.

Moratorium is a legal authorisation to debtors to postpone payment.

The petitioner said 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.

He 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.

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