The central government on Tuesday informed Supreme Court that loan moratorium period can be extended by two years as per the RBI's circular.
The government on Tuesday informed the Supreme Court that the loan moratorium period can be extended by two years as per a Reserve Bank of India circular. That came a day after a moratorium - or temporary relief - on loan repayments allowed to lenders due to the coronavirus pandemic ended. The central bank had allowed banks and other financial institutions to offer a six-month moratorium to all existing individual and corporate term loan borrowers, until August 31.
Solicitor General Tushar Mehta, representing the central government, requested the top court to allow the Centre to discuss the matter with the central bank and the bankers' association and arrive at a solution on issue of waiving interest on interest during the loan moratorium period. "There are more issues involved, GDP is down 23 per cent and economy is stressed," he said."
The lordship may go through it, the matter may be taken up tomorrow or day after tomorrow. The interest on interest part, we have discussed with the RBI officers," Mr Mehta said.
"I am saying with a great sense of responsibility. Harish Salve also spoke with the bankers' association. Most of the issues are addressed," the Solicitor General said.
"We have also to hear the interest in interest part also," said Justice MR Shah, one of the judges in the three-judge bench hearing the matter. The top court posted the matter for Wednesday as it did not get the affidavit by the Centre stating its stand.
The Supreme Court had last week sought the government's stand on waiving interest on loan repayments during the moratorium, saying it "cannot hide" behind the RBI.
The RBI had informed the court earlier that there cannot be an interest waiver during moratorium on repayments of term loans as such a move will put the banks' financial health and stability at risk.
A three-judge bench of the Supreme Court headed by Justice Ashok Bhushan was hearing two pleas filed Gajender Sharma and lawyer Vishal Tiwari seeking to extend the moratorium period to help borrowers in deferring their EMI payment on term loans amid the pandemic.