Supreme Court allows two more weeks to Centre and RBI to decide on loan moratorium

A three-judge bench of the Supreme Court said it was allowing the Centre and the RBI to come up with a plan for the last time and refused to adjourn the hearing beyond the two weeks.

The apex court has been hearing several petitions filed seeking a waiver of interest on deferred EMIs during the moratorium period, which was introduced by the Reserve Bank of India as a relief amid coronavirus induced lockdown.

The Centre told the court that consultations are taking place at the highest level to find a solution. The government has examined the concerns with banks and stakeholders, it told the bench.

Justices Ashok Bhushan, R Subhash Reddy and MR Shah through video conference said that the standard account of borrowers, who opted for loan moratorium or delay in payment of instalments, not to be considered as bad loans will continue till further orders. The court had ordered this a week ago in some relief to distressed borrowers.

The court said the borrowers need to be given protection and banks should not take any coercive action against them.

However, the Centre and the RBI have warned that waiving the interest on suspended loan EMIs will severely endanger the health of India’s commercial banks, adding that the step would be against the “the basic canons of finance" and unfair to those who repaid loans as per schedule.

The court has been told that the moratorium can be extended up to two years.

In March, the central bank had granted a loan moratorium for three months as the economy came to a standstill due to the pandemic-induced situation, and extended it till August 31 in May.