Loan Moratorium: Consider not charging curiosity on curiosity, SC to Centre, RBI

Satya Prakash

Tribune News Service

New Delhi, September 10

The Supreme Court on Thursday gave two weeks to the Centre, the RBI and banks to place their heads collectively and chalk out sector-specific schemes with regard to mortgage restructuring, charging of curiosity on curiosity and different associated points.

A Bench led by Justice Ashok Bhushan — which had earlier directed that accounts not declared NPA until Aug 31 shall to not be declared NPA until additional orders — needed the Centre to think about not charging curiosity on curiosity on deferred EMIs through the moratorium.

“On the interest issue we have yet to take a decision. But on the aspect of interest on interest, we are inclined to pass an order that it may not be debited,” the Bench mentioned.

The Bench made it clear that its interim order with regard to NPAs shall proceed.

It additionally needed the Centre and RBI to positioned on document all selections taken by them on for its perusal.

The high court docket posted the matter for additional listening to on September 28 after Solicitor General Tushar Mehta mentioned an skilled committee has been set as much as take selections on the problem of moratorium extension, curiosity on curiosity throughout moratorium and different associated points.

Coming to the rescue of distressed debtors, the highest court docket had on September three ordered banks to not declare any mortgage account non performing asset (NPA) if it was not so on August 31 when the RBI’s mortgage compensation moratorium scheme ended.

Some of the petitioners needed the court docket to direct banks to not downgrade the credit score/asset classification of debtors.

Announced by RBI in March for 3 months, the mortgage moratorium is a authorized authorization to debtors to postpone fee of EMIs. it was prolonged to 6 months until August 31, 2020.

The RBI and Centre maintained {that a} full curiosity waiver was not doable as banks too needed to pay curiosity to depositors. RBI had mentioned pressured waiver of curiosity on time period loans would jeopardise the monetary well being of banks and would additionally hurt debtors’ pursuits.

Amid uncertainty over mortgage compensation moratorium scheme, the Centre and RBI had earlier informed the court docket that it was able to being prolonged as much as two years in view of COVID-19. However, no formal choice had been taken on this regard.


The high court docket — which is seized of petitions demanding waiver of curiosity, or waiver of curiosity on curiosity on the suspended EMIs throughout moratorium — had earlier commented that there was no level in charging curiosity on curiosity.

The Bench had earlier mentioned it was primarily contemplating two points — if banks must be charging curiosity on curiosity and if the National Disaster Management Authority below the Disaster Management Act can present aid with regard to mortgage compensation in catastrophe conditions.

On the final date of listening to, Mehta had mentioned banks have been free to cope with debtors and supply them options relying upon their particular issues and wishes. A one-size-fits-all answer cannot be granted because of the distinction in difficulties confronted by totally different classes of debtors, he mentioned.

However, the Bench had mentioned the RBI wanted to situation sure directives to cope with the scenario. “What you do, that’s for you to decide. Certain things have to be decided by the Government of India and the RBI. Everything can’t be left to the banks,” it had mentioned.

Be the first to comment on "Loan Moratorium: Consider not charging curiosity on curiosity, SC to Centre, RBI"

Leave a comment

Your email address will not be published.


%d bloggers like this: