The Supreme Court has given relief to banks on the loan moratorium case today. The court has clearly stated that the term of the loan moratorium cannot be extended beyond 31 August. However, the court has given some relief to the customers saying that interest will not be paid on interest during the Moratorium Moratorium period. If a bank has charged interest on interest, it will have to return it to the lenders.
The court said that the government has the right to take economic decisions. Because the government has also suffered huge economic losses due to the epidemic. We cannot give instructions to the government on the policy. However, the Reserve Bank will soon announce a relief on this. A bench of Justices Ashok Bhushan, R Subhash Reddy and MR Shah gave the verdict.
MR Shah said that it is not possible to waive interest on interest of more than Rs 2 crore during the moratorium period. If a bank has taken interest on the interest then it has to be returned. This is the same case in which the government gave huge relief to the bank borrowers on EMI payments. In fact, last year, the country’s central bank RBI had said to give morotorium to lending companies from March 1 to May 31, which was also extended till August 31.
Dispute on interest on interest In March-August in 2020, a large number of people took advantage of the Moratorium scheme, but their complaint was that now banks are charging interest on the outstanding amount over the outstanding amount. The matter reached the Supreme Court from here. The court had asked the central government the question on why extra interest is being charged on the deferred EMI, so the government in its reply said that interest will not be charged on the outstanding installments for loans up to Rs 2 crore.
The government’s proposal includes MSME loans up to Rs 2 crore, education loans, home loans, credit card dues, car-two-wheeler loans and personal loans. Its entire burden will fall on the government, for which the government spent around 6 thousand to 7 thousand crore rupees.
Under the Moratorium, the borrowers got 6 months, but what is this?
Moratorium means if you are paying for something then it will be withheld for a certain time. Let’s understand by example, if you have taken a loan, then you can stop its EMI for a few months. But remember this does not at all mean that your EMI is forgiven.
The Moratorium was for three months, later after giving relief on the loan payment to 6 months , RBI asked the banks to do one time restructuring of the loan and not declare it NPA. Under this, the same companies and borrowers should be included, which have not defaulted for more than 30 days from March 1, 2020. For corporate borrowers, the bank should bring a resolution plan by 31 December 2020 and implement it by 30 June 2021. On May 22, RBI said in its MPC meeting that the loan moratorium was being extended for three months.
