Supreme Court on Loan Moratorium: Cannot punish honest borrowers for taking interest on interest

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The Supreme Court, while hearing the case of loan and moratorium expiration and further waiver of interest rates in the Covid 19 epidemic, said that banks are free to restructure loans but they have to pay installments during the Corona epidemic. Debtors cannot be penalized by charging more interest on the interest charged to evade payment of EMI under the moratorium plan.

A bench headed by Justice Ashok Bhushan said that taking interest on interest on withheld installments is a double whammy for borrowers. Rajeev Dutta, counsel for the petitioner Gajender Sharma, alleged that interest was charged during the period of withholding of installments. He said that the scheme was introduced by the RBI which meant that the moratorium would be able to pay the installments after the expiration date but it was further stated that even during this period banks would charge more interest on interest which would be more difficult for the borrowers. Because it is very difficult to pay interest on interest.

He further said that RBI has given a lot of relief to the banks and we have not been given any relief. At the same time, he said, “I have not done anything wrong. We cannot be punished by taking badges and badges from us for being a part of such a plan.” Dutta said the Reserve Bank of India was not an agent of the banks and the borrowers were being punished during the cowardice. Now the government is saying that the loans will be restructured. “Reorganize but don’t punish the honest debtors.

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