When the Supreme Court resumed hearing on an interest waiver motion granted by the Reserve Bank of India (RBI), a petitioner told the Supreme Court that banks are free to restructure loans, but they cannot make honest borrowers through the survey of interest punish deferred EMIs as part of the moratorium during the coronavirus pandemic.
A bank, led by Judge Ashok Bhushan, which began the final hearing on a series of petitions to waive interest on deferred loans, was told that paying interest to borrowers is a “double blow” to borrowers and banks them can not calculate.
“The RBI put the program out and we thought we would pay the EMI after the moratorium period, and later we were told that compound interest will be charged and it will be twice as bad for us since we will be paying interest on interest.” said lawyers who appeared for the petitioner.
Senior counsel Rajiv Dutta, who appears for petitioner Gajendra Sharma, who has taken out a home loan from a bank, told the court that “the public as a whole is going through a hell of a time”. He argued that if the Bankruptcy and Bankruptcy Act (IBC) could be suspended to give companies respite, what about borrowers.
“You have given so much relief to the banks and we have no real relief,” he said, adding that “there is no late payment my (applicant) and we cannot be penalized with interest for using a program”. on interest, “Dutta told the court.
Dutta claimed that the Reserve Bank of India (RBI) was a regulator and “not an agent of banks” and that borrowers would be penalized during the COVID-19 era.
“Now the government is saying it will restructure the loans. They restructure but don’t punish the honest borrowers,” he said.
In March, the RBI announced a three-month moratorium on loan repayment, which was extended until August 31. This should relieve borrowers in the course of the coronavirus pandemic and subsequent lockdowns.
Earlier on Tuesday, the central government and the RBI had told the top court that the moratorium period on loan repayment during the COVID-19 pandemic could be “extended” by two years and that several steps had been taken to help troubled sectors. The Center had told the Supreme Court that waiving interest on deferred EMIs during the moratorium period violated “basic financial rules” and would be unfair to those who had scheduled loans back.
In order to provide relief for borrowers, the RBI has presented a program that provides for an extension of the moratorium by two years for certain stressed borrowers, the central government had told the top court.
The Treasury Department had filed an affidavit with the Supreme Court asking the Center and RBI to review EMIs and interest rates during the moratorium period introduced by the program due to the COVID-19 pandemic.
By Chitranjan Kumar with PTI input