The Supreme Court Tuesday asked the Centre and the RBI to respond to a plea challenging levy of interest on loans during the moratorium period, which has now been extended by another three months till August 31 due to the coronavirus pandemic.
A bench headed by Justice Ashok Bhushan, hearing the matter through video-conferencing, issued notices to the Centre and the Reserve Bank of India asking them to file their replies within a week.
The counsel appearing for the petitioner informed the bench, also comprising Justices S K Kaul and M R Shah, that earlier the moratorium period was for three months till May 31 but now it has been extended by another three months.
The counsel argued that borrowers should not be penalised like this and banks should not add interest on the loan amount during the moratorium period.
"Counsel for the Reserve Bank of India prays for and is granted a week's time to file counter affidavit. Tushar Mehta, Solicitor General, also obtain instructions in the meantime," the bench said in its order and posted the matter for hearing next week.
On March 27, RBI had issued a slew of measures to check financial impact of the nationwide lockdown due to COVID-19. It issued a circular giving liberty to all banks and financial institution to allow a moratorium of three months on payment of installments in respect of all term loans outstanding as on March 1, subject to the borrower making such a request.