The Supreme Court on Friday asked officials of the Union finance ministry and Reserve Bank of India (RBI) to convene a joint meeting within three days to decide whether interest on EMIs during the six month moratorium period till August 31 can be charged by banks.
The top court was hearing public interest litigation (PIL) by an Agra resident, Gajendra Sharma, who demanded a waiver on interest charged by a private bank citing the relief earlier announced by RBI on the payment of equated monthly instalments (EMIs) between March and August 31 due to the coronavirus pandemic.
The central bank had on March 27 ordered a three-month moratorium till May 31 on EMIs in order to ease the financial burden on borrowers during the lockdown. This period was further extended till August 31 by a recent RBI circular.
Borrowers, who availed this facility, were told by the lending banks that the interest during the March-August period will get added to their loan amount. This would prolong the loan instalments or borrowers could get their interest component increased.
“Our concern in these proceedings is only whether the interest that has been deferred for three months will be added to charges payable later and whether there will be interest on interest,” the top court said, according to news agency ANI.
{{/usCountry}}“Our concern in these proceedings is only whether the interest that has been deferred for three months will be added to charges payable later and whether there will be interest on interest,” the top court said, according to news agency ANI.
{{/usCountry}}The three-member bench had taken exception about banks levying interests on loans when RBI had announced a moratorium on loan repayments.
“On one hand you are granting moratorium (on loans) but continuing with interest. It is more detrimental,” the three-member bench, comprising Justices Ashok Bhushan, SK Kaul, and MR Shah, said on June 4.
The Supreme Court has posted the matter for hearing on Wednesday now.