Loan Moratorium Can Be Extended For Two Years: Centre Tells SC

The submission by centre comes a day after the moratorium offered on loan repayments due to the pandemic ended.

On Tuesday, the government told the Supreme Court that the loan moratorium period can be extended by two years as per a Reserve Bank of India circular. The submission by centre comes a day after the moratorium offered on loan repayments due to the pandemic ended.

Until August 31, the RBI had allowed banks and other financial institutions to offer a six-month moratorium to all existing individual and corporate term loan borrowers.

Representing the central government, Solicitor General Tushar Mehta requested the top court to allow the Centre to discuss the matter with the central bank and the bankers’ association and figure out a solution on the issue of waiving interest on interest during the loan moratorium period. “There are more issues involved, GDP is down 23 per cent and economy is stressed,” SG Mehta said.

“The lordship may go through it, the matter may be taken up tomorrow or day after tomorrow. The interest on interest part, we have discussed with the RBI officers,” Mr. Mehta told the court.

“I am saying with a great sense of responsibility. Harish Salve also spoke with the bankers’ association. Most of the issues are addressed,” he added.

“We have also to hear the interest in interest part also,” Justice MR Shah, one of the judges on the bench hearing the matter, said.

The matter has now been posted on Wednesday by the apex court as it did not get the affidavit by the Centre stating its stand.

Supreme court, in last week, had pulled the central government over this matter saying it can’t “hide” behind RBI. It had also sought the centre’s stand on waiving interest on loan repayments during the moratorium.

There cannot be an interest waiver during the moratorium on repayments of term loans as such a move will put the banks’ financial health and stability at risk, the RBI had informed the court earlier.