NEW DELHI : The moratorium on loan repayment can be extended up to two years, according to an Aug. 6 circular from the Reserve Bank of India, Attorney General Tushar Mehta told the Supreme Court on Tuesday.
“We are in the process of identifying the sectors in difficulty to vary the benefits according to the impact of the blow they have received,” said Mehta, representing the Center.
The central government also informed the court that it had submitted an affidavit stating that the National Disaster Management Authority had become aware of the issues and sent its ‘Opinions and Recommendations’ to RBI.
The affidavit also establishes that “an ex post facto change in the terms and conditions of the moratorium offer that favors those who availed themselves of it over those who made the additional effort to pay as scheduled would be extremely unfair and clearly unfair to those who they did not. take advantage of the benefits of the moratorium initially or waive it later. “
Loans include all types of retail products, such as auto, home, personal, farm and farm loans. The central bank clarified that credit card fees will also be eligible for the moratorium.
During the moratorium, the customer does not have to pay EMI and no criminal interest is charged. It is not a concession, but a deferral of payment to provide some relief to borrowers facing cash flow problems.
On August 26, the supreme court had criticized the Center for failing to submit an affidavit on time regarding its powers to completely waive interest, or interest earned during the moratorium. The Center had to clarify its position under DMA.
Representatives of the government, the Reserve Bank of India (RBI) and the banks should hold a meeting to find a suitable solution, Mehta told the court. “Lead attorney Harish Salve has also spoken with banking associations and most of the issues have been resolved,” Mehta said.
The bench headed by Judge Ashok Bhushan said: “We are hearing this during the last three hearing dates. The country is going through a problem. We will listen to this song tomorrow at 10:30 am “.
The court will take up a slew of petitions on Wednesday demanding an interest waiver or interest waiver on interest on suspended EMIs during the moratorium period.
On May 22, the RBI had extended the moratorium on term loans until August 31 after the lockdown to control the spread of the coronavirus. Banks and other financial institutions can provide a three-month moratorium on all installments of term loans that are due between March 1 and May 31, according to the March 27 RBI circular.
Petitioner Gajendra Sharma had challenged the accrual of interest and argued that no interest should be charged during the moratorium because people were facing “extreme hardship” and paying additional interest on top of the regular EMIs would add to their problems.
.
