Supreme Court Directs Centre And Reserve Bank To Review The Loan Moratorium Scheme

Centre And RBI Should Review Loan Moratorium Scheme Directed Supreme Court

Highlights:

  • Centre and RBI brought loans moratorium amid lockdown to reduce the financial burden on the population
  • The Supreme Court is asking to review the loan moratorium scheme and create tailored schemes

On Wednesday, the Supreme Court of India directed both the Central Government and the Reserve Bank of India (RBI) to review the loan moratorium scheme, they brought amid the nationwide lockdown to reduce the financial burden from people, on term loans.

The apex court has asked to create tailored scheme for the sectors which will include agriculture as well.

The Supreme Court bench which was headed by Justice Ashok Bhushan said, “The central government can’t raise its hands in helplessness. It can’t say now that it is between banks and customer,”

The bench added that it was the duty of the central government to make sure that the “benefits are given to customer purposefully”.

The three-judge bench which also comprised Justices M R Shah and Sanjay Kishan have deferred the hearing of the case until the 1st week of August this year.

The Reserve Bank of India, on 22nd of May, extended the moratorium on term loan until the 31st of August owing to the nationwide lockdown placed to contain the spread of the deadly Coronavirus in the country.

Also, back in March, the first moratorium was allowed by the central bank for a period of 3 months from paying the EMIs and other loans on payment of all terms loans which were due between 1st March and 31st May.

The tp court also seeks clarity on the question as to whether the Indian Bank’s Association can come up with the new guideline or not.

Also Read: Top 10 Simpsons’ Predictions From The 31 Seasons Of This Popular Animated Sitcom

The court observed that the customers were not availing this moratorium scheme as they felt they are not getting any benefit from the scheme. The court also observed that despite Centre’s attempt to respond to and find a way out for the public, nothing concrete has happened.

The Indian banks Association along with the State Bank of India (SBI) is seeking to defer the hearing in the case by 3 months. The banks submitted that in this time they will know the actual burden of the moratorium on them.

Gajendra Sharma, the Petitioner, said that in the period of 3 months, the interest would continue to accrue even after availing the moratorium, which will ultimately the borrower will have to pay. The petitioner argues that even the interest on the loans should be waived off during the moratorium period as people are facing “extreme hardships”.

The petition in the Supreme Court also argues that paying the additional interest rate on top of the regular EMIs will be difficult for people.

Going by the circular of the RBI dated 27th March, banks and other financial institutions are permitted to offer a moratorium for 3 months for all the term loan instalments which were due since 1st March and are due until 31st May.

Term Loans include all kind of retail loans including home loan, vehicle loan, personal loan, agricultural term loans even as crop loans.

The Reserve Bank of India clarified that the credit card dues will also be eligible for this moratorium.

The moratorium will be provided for both, interests as well as principal repayments, this means that the moratorium is on your entire EMI(s).

A Moratorium means that you will not have to pay your EMIs for the directed period of time and no interest as a penalty will be charged.

However, it is not a concession of any kind and is simply a deferment of the payment to provide some relief to borrowers facing liquidity issues.

Avatar

Shivani Singh

Shivani has been an avid reader of newspapers since her childhood and likes to know what is happening around the world. Her love for news and bringing forth the absolute is what drove her writing for the people. She has worked in the industry for over 4 years and believes that people’s basic rights should always be honoured. Apart from reading, she is a foodie and loves to try her hands-on cooking different cuisines.

Read Previous

India-China Border Tension Is Key Years In The Past

Read Next

Do Not Want More Clashes With India Says Chinese Foreign Ministry

Leave a Reply

Your email address will not be published. Required fields are marked *