Supreme court gives Interim relief on moratorium for two months . In the case of loan moratorium (ie postponement of loan repayment). The Supreme Court has given interim relief to the people. The Supreme Court said that if no bank loan account is declared NPA till August. Then it should not be declared NPA for the next two months.
Supreme court gives Interim relief on moratorium for two months
Significantly, if the EMI of a loan is not deposited for three consecutive months. Then the banks declare it as NPA i.e. Non Performing Asset. NPA means that banks consider it as a loan. The rating of such borrowers deteriorates and further they have difficulty in getting loan.
The hearing in the Lone Moratorium case will now continue on next week on 10 September. During the hearing, the observations of the Supreme Court were very important. The Supreme Court said that the government should not take forced action on anyone if they do not repay the loan.
Government has given affidavit
The government has submitted its affidavit in the Supreme Court on Monday on loan moratorium. The government has indicated that the moratorium can be extended for two years. But only few sectors will get it. The central government had said in its affidavit that the Reserve Bank will take a decision on the matter of interest on interest.
The government has submitted a list of which sectors can be given further relief. The Solicitor General appearing on behalf of the government said, “We are identifying such sectors which can be relieved, given how much loss they have suffered.” On this, the Supreme Court said that it cannot be delayed any longer.
What is the whole matter?
In the wake of the covid-19 pandemic, the RBI issued a circular on 27 March, granting loanees the payment of installments for a period of three months. On 22 May, the RBI announced an extension of a three-month extension till 31 August, resulting in a six-month extension on loan EMI.
But in the petition filed in the Supreme Court, it was said that banks are levying interest along with EMI, which is illegal. Most of the EMI is of interest only and banks are also charging interest on it. That is, interest is also being charged on interest. On this petition, the Supreme Court sought answers from the RBI and the Center.