The Supreme Court on Tuesday directed that no compound or penal interest be charged by creditors for a six-month debt ban, and that if any amount has already been taken, it will be re-deposited or adjusted. The loan installment was announced last year in the wake of the corona virus epidemic.
The Supreme Court has refused to interfere with the decision of the central government and the Reserve Bank of India (RBI) not to extend the loan installment beyond August 31, 2020, saying it was a policy decision. The bench, headed by Justice Ashok Bhushan, said the Supreme Court would not be able to conduct judicial review if the Center’s fiscal policy decision was malicious and unconstitutional.
The Supreme Court has said that it cannot interfere with the government’s decision to set priorities for relief in the event of an epidemic affecting the entire country. In its ruling, the bench said the various petitions filed by various enterprises in the real estate and power sectors. In view of the infectious disease in these petitions, efforts were made to increase the Lone Moratorium and other remedial measures.
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The RBI issued a circular on March 27 to repay the loan installments between March 1, 2020 and May 31, 2020 in the wake of the epidemic. Subsequently, the adjournment was extended to August 31 last year. The Supreme Court said in its ruling that the Center and RBI have not considered the various measures taken by the government to provide relief to creditors.
The full exemption of interest is not possible because it has huge economic consequences, the tribunal said. The Supreme Court has reserved its verdict on the petition filed on December 17 last year. At the last hearing, the Center had told the court that in the wake of the Kovid-19 pandemic, all sections would be given interest waiver as part of the Reserve Bank exempted scheme to defer payment of loan installments. Six months. More than six trillion rupees may be left on the object.
If banks are to bear this burden, they will have to forfeit a large part of their total net assets, which will put most lending institutions at a disadvantage and this will only create a crisis, the Center said. In favor, Solicitor General Tushar Mehta said that due to this, interest waiver was not contemplated and was only allowed to postpone the installment.
No full interest waiver, moratorium period not increased: SC
