The Supreme Court on Tuesday refused to extend the six-month loan moratorium period offered by the Reserve Bank of India (RBI) last year. The top court delivered its judgement on a batch of petitions on extending the six-month loan moratorium period and waiving interest payments on coronavirus support loans. On March 27, the RBI had announced a moratorium on loan instalments due between March 1 and May 31 and subsequently extended it by three months till August 31, 2020.
The top court also said that a complete waiver of interest during the moratorium period could not be granted as banks have to pay interest to account holders and pensioners.
The central bank had earlier instructed banks and other financial institutions to credit the difference in compound interest and simple interest on repayments of eligible loans up to Rs 2 crore due between March and August, by November 5 last year.
The loan relief was meant for personal, housing, education, auto and consumer durables loans, loans to micro, small and medium enterprises (MSME), besides loans to micro, small and medium enterprises (MSME) and credit card dues, subject to applicable conditions.
The lenders were asked to credit the amount irrespective of whether the borrower fully or partially opted for the relief, and claim a reimbursement from the government by December 15.
The government has decided to bear the cost of the scheme, estimated at Rs 6,500 crore.
The amount – which is the difference between compound interest and simple interest for the six-month period – paid by lenders on eligible loans will be reimbursed by the government at a later date.