The Supreme Court has sought a response from the Centre and the Reserve Bank of India (RBI) on a petition against charging interest on loans even during the three-month moratorium period declared amid COVID-19 pandemic and lockdown.
The petitioner, Gajendra Sharma, said the accrual of interest, to be paid in bulk or on a monthly basis after the lifting of the three-month embargo on May 31, was akin to taking away with one hand what was given by the other hand.
A Bench led by Justice Ashok Bhushan asked Solicitor General Tushar Mehta, representing the Centre, to justify in the next weeks why the government and the RBI seemed to think that natural justice was not violated when “the government on one hand ceased the working of individuals and on the other hand is asking to pay the loan interest during moratorium”.
Central to the plea filed by Gajendra Sharma, the petitioner, is the March 27 RBI notification “to the extent that it charges interest on the loan amount during the moratorium period, which creates hardship in the present scenario of complete national lockdown which is extended from being time to time.”
According to the petitioner, “the interest charged during the moratorium would be added up into the EMIs at the end of three-month forbearance. It will have to be paid in one go or be equally divided in all future EMIs. The monthly bill for customers will increase ... it will defeat the very purpose of permitting moratorium on loans.”
