Interest on interest case: SC defers hearing to November 5 on loan moratorium scheme

The Supreme Court Tuesday deferred to November 5 the hearing on a batch of pleas relating to charging of interest on interest by banks on EMIs which were not paid by the borrowers who availed of the RBI loan moratorium scheme in view of the COVID-19 pandemic.

The Reserve Bank of India and the Finance Ministry have already filed separate additional affidavits in the apex court saying that the banks, financial and non-banking financial institutions will credit into the accounts of eligible borrowers by November 5 the difference between compound and simple interest collected on loans of up to Rs 2 crore during the moratorium scheme period.

A bench of Justices Ashok Bhushan, R Subhash Reddy and M R Shah was requested by Solicitor General Tushar Mehta that the hearing in the loan moratorium case be deferred as he would be busy arguing on behalf of the Centre in other matter relating to the Central Vista project.

"These moratorium matters were listed yesterday but they came up today. I am requesting for an adjournment considering I have a case (Central Vista) where I will be arguing" the law officer said.

A letter seeking deferment of the hearing in the case was also circulated by advocate-on-record Anil Katiyar for the Centre to the parties and the bench.

The top court acceded to the request and adjourned the hearing on pleas including the one filed by Gajendra Sharma on November 5.

The pleas pertained to charging of interest on interest by banks on EMIs which have not been paid by borrowers after availing the loan moratorium scheme of RBI during March 1 to August 31.

Earlier, the RBI had filed the affidavit saying that it has asked all banks, financial and non-banking financial institutions to take "necessary actions" to credit into the accounts of eligible borrowers the difference between compound and simple interest collected on loans of up to Rs 2 crore during the moratorium scheme.

Prior to this, the central government had told the apex court that lenders have been asked to credit into the accounts of eligible borrowers the difference between compound and simple interest collected on loans of up to Rs 2 crore during the RBI's loan moratorium scheme by November 5.

The government had said that the ministry has issued a scheme as per which lending institutions would credit this amount in the accounts of borrowers for the 6-month loan moratorium period which was announced following the COVID-19 pandemic situation.

On October 14, the apex court had observed that the Centre should implement "as soon as possible" the interest waiver on loans of up to Rs 2 crore under the RBI's moratorium scheme and had said that the common man's Diwali is in the government's hands.

See Zee Business Live TV Streaming Below:

The RBI had on March 27 issued the circular which allowed lending institutions to grant a moratorium on payment of instalments of term loans falling due between March 1, 2020, and May 31,2020, due to the pandemic. Later, the moratorium was extended till August 31 this year.