NEW DELHI: Attorney General Tushar Mehta told the Supreme Court on Tuesday that the moratorium period for loan repayments can be extended up to two years according to the RBI circular.
Mehta, on behalf of the Center and the RBI, presented: “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.” The Center also informed the bank that it has submitted a response regarding its powers under the Disaster Management Act.
On August 26, the high court had criticized the central government for not filing the affidavit on time regarding the government’s decision on whether interest can be waived or whether it can stop charging interest on interest earned during the period. moratorium. The Center had to clarify its position under the Disaster Management Act (DMA) and submit an affidavit implying its power.
Mehta suggested that a meeting of central government representatives should be held with the RBI and other banks to find a suitable solution. Mehta said: “Lead attorney Harish Salve has also spoken with the bankers association and most of the issues have been resolved.”
The bench headed by Judge Ashok Bhushan said: “We are hearing this in the last 3 hearing dates. The country is going through a problem, we will hear this issue tomorrow at 10:30 am.
The court will hear in detail the set of petitions calling for the waiver of interest or waiver of interest on the interest of suspended EMIs during the moratorium period on Wednesday morning.
On May 22, RBI extended the moratorium on term loans until August 31 amid the national lockdown due to covid-19. In March, the central bank had allowed a three-month moratorium on the payment of IMEs and other loans on the payment of all term loans that mature between March 1 and May 31.
Petitioner Gajendra Sharma said that, over the three-month period, interest would continue to accrue during the moratorium, which the borrower would ultimately have to pay. The petitioner argued that no interest should be charged during the moratorium because people face “extreme hardship.” The petition also noted that paying additional interest on top of the regular EMI would be difficult.
According to the RBI’s March 27 circular, banks and other financial institutions are authorized to establish a three-month moratorium on all installments of term loans that are due between March 1 and May 31. Term loans will include all types of retail loans, such as auto loans, home loans and personal loans, agricultural term loans, and agricultural loans. The central bank has clarified that credit card fees will also be eligible for the moratorium. The moratorium will be provided for both interest and principal repayment, which means the moratorium applies to all of your EMI.
The moratorium basically means that you do not have to pay your EMIs during that period of time and you will not be charged criminal interest. It is not a concession of any kind and is simply a deferral of payment to provide some relief to borrowers facing cash flow problems.
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