Loan interest during moratorium: Supreme Court notice to Govt, RBI

Solicitor General Tushar Mehta said he will take instructions on the matter. It will be heard again after two weeks.

The petitioner urged the court to declare ultra vires that part of the RBI’s March 27 notification on the charging of interest since it “creates hardship in the present scenario of complete national lockdown being extended from time to time due to the Covid-19 outbreak”.

Sharma pointed out that though RBI, by way of the notification, permitted all banks to grant a moratorium of three months on payment of all instalments due between March 1 and May 31, it “made clear that interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period”.

Sharma said he was running an optical shop in Agra and had a gross total income of about Rs. 6.57 lakh per annum. He had availed a home loan and had been paying the EMIs without defaulting.

The extended lockdown, he said, had created “immense burden” on his “budget as apart from paying EMI on home loan”, he had to “pay his employees… and also manage financial aspects of his home and family”.

“In the present scenario, when all the means of livelihood has been curtailed by the Government of India by imposition of a complete lockdown pan-India… the Petitioner, being a citizen of India, has no way to continue his work and earn livelihood… imposition of interest during the moratorium will defeat the purpose of permitting moratorium on loans,” he said.