SC gives 3 days to Finance ministry, RBI to decide on waiver of interest on loans

The Supreme Court on Friday asked the Finance Ministry and therefore the Federal Reserve Bank of India to carry a gathering within three days to make a decision on waiver of interest on interest for deferred payments of instalments for loans during the moratorium period announced in wake of the coronavirus-induced lockdown. The court was hearing a plea filed by a Agra resident on the difficulty.

A bench of Justices Ashok Bhushan, S K Kaul and M R Shah said the question isn’t of waiver of complete interest for entire moratorium period but it’s limited only to interest charged on interest by banks.

It posted the matter for further hearing next week. During the hearing, the bench said that it’s trying to require a balanced view of the matter, and only wants that wider measures should be adopted.

Solicitor General Tushar Mehta, appearing for the Centre, said that he had sought a gathering with the RBI. The bench said that if the RBI reply “goes much beyond the query posed by us there’ll be tons of opinions on it”.

Our query is extremely limited on whether there is often waiver of interest on interest, it said.

It asked the Centre to file an affidavit after holding the meeting with the RBI on the choice taken.

The bench was hearing a plea filed by Gajendra Sharma, during which he has sought a direction to declare the portion of the RBI’s March 27 notification “as ultra vires to the extent it charges interest on the loan amount during the moratorium period, which create hardship to the petitioner being borrower and creates hindrance and obstruction in ‘right to life’ guaranteed by Article 21 of the Constitution of India”.

Sharma has also sought a direction to the govt and therefore the Federal Reserve Bank of India (RBI) to supply relief in repayment of loan by not charging interest during the moratorium period.

On June 4, the highest court had sought the Finance Ministry’s reply on waiver of interest on loans during the moratorium period after the RBI said it might not be prudent to travel for a forced waiver of interest risking financial viability of the banks.

The top court had said there are two aspects into account during this matter – no interest payment on loans during the moratorium period and no interest to be charged on interest.