The Supreme Court hearing on the loan interest waiver case has started. Petitioners, including builders, power producers and real estate agents, had appealed to the Supreme Court to seek redress in terms of interest rates charged by banks and NBFCs. The SC could now decide if these petitioners will get relief or if the matter will be settled. This batch of petitions concerns the collection of interest on interest by banks on IMEs (equivalent monthly installments) not paid by (loan) borrowers who have benefited from the RBI loan moratorium regime.
The pleadings, filed in the highest court, call for an extension of the moratorium on loans as well as a waiver of interest on EMI term loans during the six-month moratorium period. At its previous hearing on November 5, the SC postponed the case to November 18.
The three-judge SC bench led by Judge Ashok Bhushan is expected to issue a formal order in the case today. The RBI and the Ministry of Finance have already filed separate additional affidavits with the Supreme Court, indicating that banks, financial institutions and non-banks will credit the accounts of eligible borrowers by November 5 the difference between compound interest and singles levied on loans of up to Rs 2 crore during the period of the moratorium regime.
Earlier, the central government told the Supreme Court that lenders were asked to credit the accounts of eligible borrowers with the difference between compound interest and simple interest.
On October 14, the Supreme Court observed that the Center should implement “as soon as possible” the interest exemption on loans of up to 2 crore rupees under the RBI moratorium program and said that the ordinary man’s Diwali was in the hands of the government.
The case concerns the RBI circular of March 27, which allowed credit institutions to grant a moratorium on the payment of maturities of term loans maturing between March 1, 2020 and May 31, 2020, due to of the pandemic. The moratorium was then extended until August 31 of this year.