File image of the Supreme Court of India | Photo: Manisha Mondal | ThePrint
File image of the Supreme Court of India | Photo: Manisha Mondal | ThePrint
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New Delhi: The Supreme Court Tuesday issued notice on a petition demanding that interest on loans be waived for the period of the moratorium prescribed by the Reserve Bank of India (RBI).

As the country grapples with Covid-19, the RBI had prescribed a three-month moratorium on EMIs, which has now been extended for another three months. The moratorium exempts borrowers from paying their EMIs for a specific period of time, and is essentially a deferment of payment to provide relief to them, but interest liabilities will continue to accrue.

The bench comprising Justices Ashok Bhushan, Sanjay Kishan Kaul and M.R. Shah sent notices to the RBI and the central government, and agreed to hear the case next week.

On 8 May, the court had permitted Solicitor General Tushar Mehta time to seek instructions on the issue, and had asked the case to be listed after two weeks. It had permitted a copy of the petition to be served to the lawyers for the central government.


Also read: RBI uses bazooka to fight virus with 75 bps rate cut, moratorium on term loan repayments


‘Devastating, arbitrary, capricious’

The petition was filed by Agra resident Gajendra Sharma, through senior advocate Rajiv Dutta earlier this month.

Sharma’s petition informed the court that he had taken a home loan of around Rs 37 lakh from ICICI Bank, and that due to the lockdown, he has no income and so cannot pay the EMI.

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He is challenging the RBI notification dated 27 March as violative of Article 21 of the Constitution, submitting: “In the present scenario, when all the means of livelihood has been curtailed by the government of India by imposition of complete lockdown pan India, due to worldwide outbreak of Covid-19 pandemic and the petitioner being a citizen of India has no way to continue his work and earn livelihood, imposition of interest during the moratorium will defeat the purpose of permitting moratorium on loans.”

Sharma asserts that no interest should be charged at all during the moratorium period, and called the RBI’s decision “devastating, wrong”.

He also called it “arbitrary and capricious”, which placed an “over burden upon borrowers” like him.

The petition explained: “The interest charged during moratorium period would be added up into the EMIs at the end of three-month forbearance, will raise in the monthly bill or have to pay this additional interest in one go or will be allowed to get it adjusted as an additional EMI.

“…the additional interest burden for three months moratorium period is also equally divided in all future EMIs, the monthly bill for customer will increase.”


Also read: This is what you need to do if you want to pay, or not pay, your loan EMI for 3 months


 

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7 Comments Share Your Views

7 COMMENTS

  1. Bajaj Finance, Lending Kart and some other financers are saying that they have not received any instructions from RBI in regard to extension of Moratorium. They have communicated that they will present ECS and ECS bounce charges will be applicable if sufficient funds are not there.

    They are making a mockery of this national crisis.

  2. Bajaj Finserv is not following RBI guidelines and fooling the people. I have availed moratorium for April & May when the first announcement was made by RBI. The second announcement came from RBI Governor on 22nd May regarding moratorium extension. This clearly means that the moratorium should have been continued till lock down is in force but they have presented cheque through ECS in my bank account which I came to know when I checked my bank account online on 29th May. On their app also they have cleverly mentioned that since June ECS has been processed so now the moratorium can be availed for July & August only. Just to add that I have already intimated to them through mail not to debit or process ECS as the moratorium has been extended by three more months. Very unprofessional.

  3. The banks talk of schedule rates of interest accepted at the time of sanction and not the present reduced rates.kindly hear them well

  4. Title is confusing. The petition is about waiver of accumulated interest during moratorium and not about the interest itself. Title is not reflecting the spirit of the petition.

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