SC refuses to extend 6-month loan moratorium period

Supreme Court on Monday refused to extend six-month loan moratorium period offered by the Reserve Bank of India and said complete waiver of interest during the moratorium could not be granted. The Apex Court rejected the pleas from various trade associations and corporate bodies to extend the six-month loan moratorium period offered by the Reserve Bank of India. A bench headed by Justice Ashok Bhushan said the top court cannot do a judicial review of the Centre’s financial policy decision unless it is malafide and arbitrary. Last year on 17th December, the Bench headed by Justice Ashok Bhushan had reserved its verdict on the batch of pleas.

The SC said no direction could be issued to the govt or the RBI to announce any particular financial package or relief, and held that it could not issue directions to provide relief to particular sectors over and above others.The apex court directed that there should be no interest on interest or penal interest on any amount during the loan moratorium from any borrower. Justice Shah observed that Pandemic affected all sectors and govt had to take measures such as providing transport to migrants, etc. Even govt had no support during Pandemic and even GST loss that was incurred. The Court has considered reliefs independently. Waiver of complete interest is not possible as banks have to pay interest to account holders and pensioners. RBI had on March 27, 2020 announced a moratorium on loan instalments due between March 1 and May 31. The moratorium period was later extended by three months till August 31, 2020. The moratorium was intended to provide borrowers relief during the COVID-19 pandemic, enabling them to defer payments on EMIs.