The Supreme Court on Friday agreed to hear a plea seeking interest waiver on outstanding loan payments for the period of the nationwide lockdown and to widen the Reserve Bank of India’s (RBI) March 27 circular.
Consequently, the apex court has issued a notice to the central government and to RBI seeking a reply within two weeks.
According to the circular, RBI is allowing financial institutions to allow customers a moratorium on loan installments that fall between March 1 and May 31.
However, under the RBI circular, the interest chargeable during the moratorium period of three months, would be added to the loan installments that fall after the prescribed period. It is this interest burden that is being contest in the plea.
The plea argued that the aim of the moratorium circular was to provide relief on account of a loss of livelihood and income during the nationwide lockdown. The petition said if those suffering from loss of income are unable to pay the monthly equated monthly installments (EMIs), they surely can’t be expected to be able to pay the interest dues.
The petitioner argued that imposition of interest burden would have a devastating effect. Such an interest burden, as per the plea, defeats the very purpose of allowing the relief to customers.It also argued that interest burden is violative of the right to life and the right to livelihood. Petitioner argued that RBI imposing the interest burden is both arbitrary and capricious.