- Banks have given the facility of moratorium for 6 months, interest is also being charged on this
- The facility was given for three months at first, then later it was extended for three months
Jun 12, 2020, 02:03 PM IST
Mumbai. During the hearing on Friday, the Supreme Court took a somewhat soft stance on the loan EMI case. An attempt has been made to find a middle ground. The Supreme Court directed the Reserve Bank and the Ministry of Finance to take a decision in this matter within three days. Its next hearing will be on 17 June.
Got 6 months deferment to pay EMI
Due to corona crisis and lockdown, people have got six months' time to repay the EMI of the term loan. However, during this time the matter is going on in the Supreme Court about whether the interest is waived or not. In this hearing, the court said that within three days, the Reserve Bank and the Finance Ministry should take a decision. The court has asked the central government to give its reply within three days about what happened about it.
Court's concern over interest charged
The main concern of the Supreme Court is now whether the interest to be paid in EMI will also be charged. The court said that it is trying to find a middle ground. Our concern is that the interest that has been waived, what will be taken from the customers by adding it further and will interest be charged on this interest also. Many people are not able to repay the EMI of the loan due to the closure of business in lockdown.
2 lakh crore loss due to interest waiver
On the Reserve Bank's order, banks have given six months moratorium in EMI, but the interest on the loan seems to be equal. A petition has been sought in the Supreme Court seeking exemption from paying interest. Banks say that they can suffer a huge loss of about Rs 2 lakh crore due to the waiver of interest on the loan, which is not possible for them to bear the burden. RBI says that this will severely impact the banking sector.
All banks believe that interest on EMI cannot be waived
A division bench of Justice Ashok Bhushan, Justice Sanjay Kishan Kaul and Justice MR Shah asked questions from Solicitor General Tushar Mehta in the case. The bench asked how the interest of these 3 months can be added. Mehta replied that I need to sit and have a meeting with the RBI officials. During the hearing, Senior Advocate Mukul Rohatgi, on behalf of SBI, said that all banks believe that interest cannot be waived on six months EMI.
Court's concern – no further interest on Moratorium
Rohatgi stressed that we need to discuss this with the RBI. After this, Justice Bhushan has asked Mehta to call a meeting of officials of RBI and Finance Ministry at the end of the week. The court indicated during the hearing that it was not considering a complete waiver of interest. However, it is only concerned that the moratorium should not attract further interest. RBI had said that after waiving interest on EMI during Moratorium, there will be 1 percent loss of GDP of the country.