NEW DELHI: Supreme Court verdict in loan moratorium case – Ruling on the loan moratorium case, the Supreme Court on Tuesday ordered the full waiver of compound interest from all borrowers. Previously, the Reserve Bank of India (RBI) did not include personal loans exceeding Rs 2 crore under the loan moratorium announced by the central bank. The higher court ordered the financial organizations to reimburse or adjust the penal interest of all borrowers. Read also – LIVE Bangladesh vs Sri Lanka 3rd ODI Live Cricket Score & Updates: BAN Eye Whitewash Against SL
However, citing that banks will have to pay interest to retirees and account holders, the trial judge Judge MR Shah said a full waiver of interest could not be made. The Apex court rendered its verdict on a series of petitions filed by the borrowers. The petitioners in the loan moratorium case have requested relief from interest on interest against IMEs that were not paid by them during the Covid pandemic while availing themselves of the loan moratorium program announced by the Reserve Bank of India last year. Read also – Asian boxing: 5 Indians including MC Mary Kom enter the gold medal round
Top 10 takeaways from Supreme Court verdict in loan moratorium case
- There will be no interest on interest or compensatory interest during the moratorium period, regardless of the amount of the loan. Any amount thus collected will be refunded, noted the Supreme Court.
- We believe that there will be no interest on interest or compensatory interest during the moratorium period, regardless of the amount of the loan. Any amount thus collected will be refunded, according to Bar & Bench, cited by Judge MR Shah.
- There is no justification for not charging interest on interest for loans up to Rs 2 crore only. Even otherwise, a regime granting a waiver of compound interest was considered. The government granted the postponement of the moratorium, Bar & Bench quoted Judge MR Shah.
- If repayment is not possible, the interest on the interest received will be adjusted in the next installment payable, Judge MR Shah said.
- Further steps need to be taken to provide sector-specific relief by the RBI, the Top Court judge said.
- However, the Supreme Court rejected the petitioners’ demands for a total waiver of interest during the moratorium period. The higher court rejected the extension of the moratorium period.
- The Supreme Court rejected the extension of the time limit for invoking the resolution mechanism.
- The Supreme Court rejected the sectoral relief provided by RBI.
- The Supreme Court has rejected other reliefs in addition to the packages already on offer, according to a report from Bar & Bench.
- The Supreme Court’s verdict in the loan moratorium cases was delivered by a bench of Judges Ashok Bhushan, R Subhash Reddy and MR Shah.