The Supreme Court has decided to postpone the hearing of the Loan Moratorium case to November 18, 2020, after the Centre had announced that the Solicitor General who was presenting the arguments before a bench of people in the Central Vista on Thursday, November 5, 2020. The top court then decided to postpone the hearing, which calls for a loan relief scheme for the borrowers having a tough time due to the Covid-19 pandemic.
The top court has ordered all the parties’ lawyers to prepare a short note & submit it to the court before the next hearing takes place. The Reserve Bank of India (RBI) had sanctioned a six-month loan moratorium, allowing the borrowers to withhold payments on their loans and EMIs during the COVID-19 pandemic.
The central government has agreed to ignore compound interest on minor, small, medium employment (MSME) loans and some individual loans amounting up to Rs 2 crore. The RBI has also filed an affidavit to the Supreme Court (SC), which clearly states that banks and non-banking finance companies (NBFCs) will be needed to repay the ‘interest on interest’ amount collected on loans during the moratorium period amounting up to Rs 2 crore by November 5.
Justice Ashok Bhushan was leading the bench has resumed the hearing on Thursday, November 5, 2020. They were charging about the ‘interest on interest’ or the banks’ compound interest upon the EMIs, which have been delayed by the borrowers from March to August 2020. The main petitioner, Gajendra Sharma, thanked the court, government, and Solicitor General for their generosity of giving relief to these needy borrowers and holding their hands during this time of crisis.
The RBI has ordered the other banks and other non-banking financial institutions to calculate all the difference in compound interest and simple interest on the amounts meant for repayment of the loans eligible, amounting up to ₹ 2 crores, and are due between March and August. This is ordered to be done by November 5, 2020. The loan relief is available to the borrowers for personal reasons, housing loans, education loans, auto and consumer durables loans, and micro, small and medium enterprises (MSME) loans. Apart from these loans regarding micro, small, and medium enterprises (MSME), the credit card dues’ loans are also given.
The lenders will be required to give the amount notwithstanding whether the borrower has borrowed the loan for relief fully or partially. They will have to claim their reimbursement by December 15, 2020.
The Supreme Court had asked the government to bear the cost of around Rs 65.000 crore. This would be repaid when the borrowers repay their loan in the respective financial institutions. The amount of repayment is the difference between the Compound interest & simple interest of the amount borrowed.