Problems in economy created by lockdown; clear stand on banks charging additional interest on loan moratorium: SC to Centre

NEW DELHI: The Supreme Court on Wednesday (August 26, 2020) said that the problem in the country’s economy was created due to the government’s decision to impose the strict lockdown to curb the spread of coronavirus and that it is more concerned about the plight of the common man.

During a hearing in a case pertaining to the loan moratorium announced by the RBI, the Supreme Court bench, comprising Justices Ashok Bhushan and MR Shah, asked the Centre to clear its stand on the charging of additional interest by banks during the moratorium period and asked why it had not yet filed an affidavit in the matter.

The Supreme Court bench said, “You clear your stand. You say RBI has taken the decision; we have gone through RBI reply but Centre is hiding behind the RBI.”

The Supreme Court bench also asked Solicitor General Tushar Mehta, appearing on behalf of the Centre, to give a timeline as to when the government will file the affidavit in the loan moratorium case. Mehta then sought a one-week extension to file the affidavit.

Expressing concern about the current economic situation, Justice MR Shah even told Mehta that this is not the time for the Centre to think about "business". 

“The problem has been created by your (Centre's) lockdown. This is also not the time to consider business. The plight of people has to be considered,’’ the Supreme Court bench observed.

The top court made this observation while hearing a plea challenging the levy of interest on loan repayments during the moratorium. The matter will be heard next on September 1.

The RBI had announced an optional 6-month moratorium for customers towards fixed-term loans and EMI payments. The moratorium period ends on August 31.

The Supreme Court had last heard the matter pertaining to the plea against the charging of additional interest in the loan moratorium case on June 17.

During the hearing, the top court had asked the government to interfere in the matter and questioned the banks for charging of additional interest during the loan moratorium period.

The SC bench, while hearing the plea challenging the levy of interest on loan repayments during the moratorium, said the government cannot “leave everything to be decided by banks”.

The RBI had earlier announced an optional 6-month moratorium for customers towards fixed-term loans and EMI payments. The moratorium period ends on August 31.

The top court had earlier made it clear that they were concerned only about charging of “interest on interest” for those who had opted for the loan moratorium.