SC on interest waiver on loans in moratorium: Don't see merit in charging interest on interest
The government told the SC that waiver of interest will hurt the interests of the depositors.
June 17, 2020 / 12:34 PM IST
The Supreme Court on June 17 said the government has to make the benefits of loan moratorium available to people, adding it doesn't see merit in charging interest on interest on loans on which moratorium has been claimed by people.
"Once you fix a moratorium, it should serve the desired purpose," said the apex court, which is hearing a plea seeking interest loan waiver for the period of moratorium.
The government can't leave everything to banks and can consider intervening in the matter, the court said after the government said that interest waiver would hurt depositors' interest.
State Bank of India (SBI) said 90 percent of borrowers had not even sought a moratorium and interest waiver cannot be issued "like a free gift".
"Customers haven’t opted for moratorium because they know they are not getting any benefits."
"Customers haven't opted for moratorium because they know they are not getting any benefits," the SC said.
The Reserve Bank of India (RBI) has allowed banks to put on hold repayment of EMIs until August 31 to offset coronavirus pain.
The SC asked the Centre to clarify if banks can charge interest on deferred interest.
The SC also noted that the issue can’t be left to the banks and borrowers.
The top court granted the RBI, finance ministry some more time to revisit the issue of the moratorium.
The Indian Banks Association (IBA) and SBI argued that the situation is evolving, SC should defer hearing in this case for three months.
The SC has deferred the hearing to the first week of August.