LI NETWORK
The Supreme Court has reserved the verdict on pleas concerning the extension of the loan moratorium period.
The pleas were related to charging of interest on interest by banks on EMIs, which were not taken care of by borrowers.
The borrowers had not paid the interest on interest after the loan moratorium scheme from March 1 to August 31 in the pandemic.
On March 27, the RBI had issued the circular allowing the lending institutions to grant a moratorium on payment of installments of term loans falling due between March 1 and May 31, in the wake of the pandemic.
Later, the period was extended to August 31, 2020.
Earlier, Solicitor General Tushar Mehta stated that case by case restructuring of loan accounts is not possible for the RBI or the Finance Ministry.
He also mentioned that most of the petitions state the issues that they have faced before COVID-19 too.
He also stated that the banks are facing the stress of the Non- Performing Assets (NPAs) already. If the interest is waived off, the cost associated with it will have to be taken either by the bank or the government. In this case, none of the two is possible.
The Supreme Court of India had earlier observed that the restructuring circular is not enough, and there needed to be more measures taken.