The Supreme Court on Tuesday came out with its verdict for a
batch of pleas from various organisations seeking extension of loan moratorium
and other reliefs in face of the COVID-19 pandemic. The bench, headed by Justice
Ashok Bhushan, said that no compound or penal interest would be charged from
the borrowers within the six-month moratorium period, PTI reported.
Significantly, the apex court chose not to interfere with
the Centre and Reserve Bank of India’s decision to not further extend the moratorium
beyond August 31, 2020, the deadline prescribed by the RBI last year.
The bench said it could not interfere with the Centre’s
financial policies unless they were malafide and arbitrary.
Here are five important points from Tuesday’s deadlines:
1.
The top court ruled that there shall be a waiver
of interest on interest (compound interest) for all borrowers, irrespective of
amount of loan or category, further asking the banks to adjust amounts
recovered as compound interests in the moratorium period.
It also ruled that any amount collected as
compound interest would be adjusted to the next instalment instead of returning
it to the borrower.
2.
The SC declined to waive off all interest as
well as refusing to extend the period of moratorium any further, essentially
meaning that the previous deadline of August 31, 2020 would stand for now.
3.
This would help the borrowers significantly, as
there would not remain a loan cap of Rs 2 crore, which had previously been suggested
by RBI and the Centre.
4.
Several appeals, however, were also rejected by
the court. These include – apart from total waiver of loans during moratorium
period and extending the latter – to extend the period of invocation of resolution
mechanism, and pleas to direct the RBI and government to provide sector-wise
relief.
5.
In its judgement, the SC also said that the manner
in which economic packages are provided falls within the scope of the executive
structure, and that itself did not retain the expertise to deal with the
matter.
