On Wednesday, the Supreme Court asked the central government to clarify its position on the waiver of interest on loan as well as interest on interest amid the pandemic.
"You cannot be interested only in business and not about sufferings of people," the top court said.
It further said, "it appears that the Centre is hiding behind the RBI decision on this issue when it had ample powers under Disaster Management Act to decide whether it could stop banks from charging interest on deferred EMIs (equated monthly instalments) and stop interest on interest for moratorium period."
Solicitor General Tushar Mehta, representing the government, said that the RBI as a regulator is the one that will take a position and that the central bank feels that there cannot be a one size fits all solution. He added that the central bank is looking to identify the stressed accounts and provide relief in terms of lower interest rates. Mehta further said that the Supreme Court should not make such observations, it will be distorted and reported.
In response, the apex court observed that the problem arose on account of the lockdown declared by the government and it should clarify its position on the issue but has still not filed its response on the same.
The next hearing on the matter is scheduled for 1 September.
The plea being contested is on the issue of the burden of interest chargeable during the loan moratorium granted as COVID-19 relief, which will be charged on interest and principal already due by customers during the 6-month period.
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. If those suffering from the loss of income are unable to pay the monthly equated monthly instalments (EMIs), they surely can't be expected to be able to pay the interest dues, the petition said. The petitioner argued that the imposition of interest burden would have a devastating effect and would violate the right to life and right to livelihood.
Such an interest burden, as per the plea, defeats the very purpose of allowing the relief to customers.