Centre said RBI has come out with scheme to extend moratorium to up to two years
Waiving interest on EMIs and interest on interest during the loan moratorium period would be against “the basic canons of finance” and unfair to those who repaid loans as per schedule, the Centre told the Supreme Court on Tuesday. The finance ministry filed an affidavit on Tuesday after the top court, hearing a petition on the issue, asked the Centre and the Reserve Bank of India (RBI) to review the move to charge interests during the moratorium period.
The government said that any “post facto” change on payment of interests, to the RBI’s moratorium scheme would be unfair to those who kept paying their EMIs.
“I respectfully state and submit that ex post facto change in the terms and conditions of the offer of moratorium favouring those who availed of it over those who made the extra effort of repaying as per schedule would be grossly inequitable and patently unfair for those who did not avail of the benefits of moratorium initially or gave it up subsequently”, the Centre’s affidavit mentioned.
In the affidavit, the Centre also said that the RBI has come out with a scheme which provides for extension of moratorium for two years to certain borrowers. Referring to the August 6 circular by RBI, the Centre also listed a number of measures aimed at providing relief to stressed borrowers. The affidavit mentioned that the central bank’s circular provides for “extension of the residual tenor of the loan, with or without moratorium, by up to two years, waiving penal interest and charges”, rescheduling repayment, converting accumulated interest into a fresh loan with a deferred payment schedule and sanction of additional loan.”
