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National News

Jun 04, 2020
3:34PM

Supreme Court seeks finance ministry's reply on waiver of interest on loans during moratorium period

AIR
The Supreme Court has sought the finance ministry's reply on waiver of interest on loans during the moratorium period after the RBI said it would not be prudent to go for a forced waiver of interest risking financial viability of the banks.

The top court said there are two aspects under consideration in this matter - no interest payment on loans during the moratorium period and no interest to be charged on interest.

A bench of Justices Ashok Bhushan, Sanjay Kishan Kaul and M R Shah said that these are challenging times and it is a serious issue as on one hand moratorium is granted and on other hand interest is charged on loans.

The bench was hearing a plea, filed by Gajendra Sharma, in which he has sought a direction to declare the portion of RBI's March 27 notification as ultra vires to the extent it charges interest on the loan amount during the moratorium period, which create hardship to the petitioner being borrower. The petition says this creates hindrance and obstruction in 'right to life' guaranteed by Article 21 of the Constitution of India. The petition has also sought a direction to the government and the Reserve Bank of India (RBI) to provide relief in re-payment of loan by not charging interest during the moratorium period.

Solicitor General Tushar Mehta, appearing for the Centre, said that he would like to file the reply of finance ministry on the issue and sought time.

Senior advocate Rajeev Dutta, appearing for petitioner Gajendra Sharma, cited a recent apex court order which said that economic interest is not higher than the health of people. Dutta said that by the submission of the RBI, it means that only banks should earn profit while rest of the country goes down during the pandemic.

The top court asked the Solicitor General to file the response by June 12 and allowed the petitioner and other parties to file rejoinder by then.

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