Supreme Court hearing on waiver of interest and extending the repayment of EMI. The hearing has started in the Supreme Court on the applications for grant of loan moratorium. And granted by the RBI in the lockdown and relaxation of interest. The debate was not completed on Tuesday. Loan moratorium means to waive the installment of the loan for a few months. RBI had given this facility for 3 months in March. And given the Corona situation and lockdown, then increased to 3 more months till August.
Supreme Court hearing on waiver of interest and extending the repayment of EMI
Now that the moratorium has completed 6 months, customers are saying that it should be increased further. Even more important is that the interest of moratorium period should also be waived. Because, charging interest on interest would be a double whammy. The reason for this is that RBI had only allowed to postpone EMI. But the interest on the outstanding installments will have to be repaid.
The government argues
The government on behalf of the Solicitor General Tushar Mehta “then waived interest will worsen the situation of banks, told the court on Wednesday. There are different banks in different ways across the country. Non-Banking Financial Companies (NBFCs) are also included . ”
Earlier on Tuesday, the government said that the moratorium period could be extended for up to 2 years, given the situation in Corona. The government’s reply came because on August 26, the Supreme Court had reprimanded the government and said that the situation should be cleared in this case in 7 days. The court had commented that the government is taking cover of the RBI decision, while it has the authority to take decisions on its own.
What is moratorium?
Due to corona and lockdown, the RBI in March gave people the facility to postpone the moratorium ie loan EMI for 3 months. Later it was extended for 3 months till 31 August. The RBI had said that if the loan installment is not repaid for 6 months, it will not be considered a default. However, after the moratorium, full interest will have to be paid on the outstanding payment.