Loan moratorium capable of being extended by two years, Centre, RBI tell SC

Loan moratorium capable of being extended by two years, Centre, RBI tell SC

Amid uncertainty over loan repayment moratorium scheme that ended on August 31, the Centre and RBI told the Supreme Court on Tuesday that it was capable of being extended by two years in view of COVID-19 pandemic.

However, Solicitor General Tushar Mehta told a three-judge Bench led by Justice Ashok Bhushan that a formal decision was yet to be taken.

On behalf of the Centre and RBI, Mehta said that a fresh affidavit has been filed in the top court on the issue. "We are in the process of identifying the distressed sectors to vary benefits as per the impact of hit they have taken," he said.

"Please let the Centre, RBI and Bankers Association put their heads together,” Mehta said

Noting that the economy has contracted by 23 per cent due to COVID19, he said several steps had been taken for stressed sectors.

The top court -- which is seized of petitions demanding waiver of interest, or waiver of interest on interest on the suspended EMIs during moratorium -- had earlier commented that there was no point in charging interest on interest.

Maintaining that the matter can't delay any further, the Bench posted it for further hearing on Wednesday.

"Mr. Mehta, this Bench is not scheduled to sit tomorrow. We will sit tomorrow only to hear this case," the court said.

Announced by RBI in March for three months, the loan moratorium is a legal authorization to debtors to postpone payment of EMIs. it was extended to six months till August 31, 2020.

The RBI and Centre maintained that a complete interest waiver was not possible as banks too had to pay interest to depositors