Moratorium on loans can be extended by 2 years: government
NEW DELHI : The moratorium Loan repayments can be extended for up to two years, according to an Aug. 6 circular from the Reserve Bank of India, Solicitor 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 suffered,” said Mehta, representing the Center.
The central government also informed the bench that it had filed an affidavit stating that the National Disaster Management Authority had taken note of the issues and had sent its “opinions and recommendations” to the RBI.
The affidavit also states that “an ex post facto change in the terms and conditions of the moratorium offer favoring those who benefited from it over those who made the extra effort to repay on schedule would be grossly unfair and manifestly unfair to those who did not reap the benefits of the moratorium first or waive them afterwards. “
Loans include all kinds of retail products, such as auto, real estate, personal, farm and farm loans. The central bank has clarified that credit card contributions will also be eligible for the moratorium.
During the moratorium, the customer does not have to pay an IME and no penal interest is charged. This is not a concession, but a deferral of payment to relieve borrowers facing liquidity problems.
On August 26, the Supreme Court criticized the Center for failing to file an affidavit on time regarding its powers to waive all interest or interest accrued during the moratorium. The Center had to clarify its position within the framework of the DMA.
Representatives of the government, the Reserve Bank of India (RBI) and banks should come together to find a suitable solution, Mehta told the court. “Senior lawyer Harish Salve has also spoken to banking associations and most of the issues have been resolved,” Mehta said.
The bench led by Judge Ashok Bhushan said: “We are hearing this for the last three court dates. The country is going through a problem. We will hear about this issue tomorrow at 10:30 am. “
The court will consider a series of motions on Wednesday demanding the waiver of interest or waiver of interest on interest on IMEs suspended during the moratorium period.
On May 22, RBI extended the moratorium on term loans until August 31 following the lockdown to control the spread of the coronavirus. Banks and other financial institutions are allowed to grant a three-month moratorium on all term loan payments that were due between March 1 and May 31, according to the RBI circular of March 27.
Petitioner Gajendra Sharma had challenged the accumulation of interest and argued that no interest should be charged during the moratorium because people were facing “extreme hardship” and the payment of additional interest on top of the Ordinary IMEs would add to their woes.
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