Loan moratorium can be extended by up to two years: Centre tells Supreme Court

In what comes as a major relief for borrowers, the Center has hinted that the loan moratorium can actually be extended by another two years. The same was also conveyed to the Supreme Court on Tuesday by solicitor general Tushar Mehta, citing an August 6 circular by the Reserve Bank of India.

ZeeBiz WebTeam | Sep 02, 2020, 12:02 PM IST

In what comes as a major relief for borrowers, the Center has hinted that the loan moratorium can actually be extended by another two years. The same was also conveyed to the Supreme Court on Tuesday by solicitor general Tushar Mehta, citing an August 6 circular by the Reserve Bank of India.

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Loan Moratorium

Loan Moratorium

“We are in the process of identifying the distressed sectors to vary benefits according to the impact of the hit they have taken," Mehta said, representing the Centre. The central government also apprised the bench that it has filed an affidavit stating that the National Disaster Management Authority has taken cognizance of the issues and sent its ‘Views and Recommendations’ to RBI.

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Loan Moratorium

Loan Moratorium

The affidavit also states 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." 

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Loan Moratorium

Loan Moratorium

This would include all types of loans on retail products like vehicle, home, personal loans, agricultural, and crop loans. The central bank clarified that credit card dues will also be eligible for the moratorium. The moratorium was first announced by the Centre in the wake of coronavirus crisis when it said that borrowers can defer their EMIs for a period of three months. The period was later extended as the situation failed to improve. Banks and other financial institutions are permitted to provide a moratorium of three months for all term loan instalments that were due between 1 March and 31 May, according to the 27 March RBI circular. 

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Loan Moratorium

Loan Moratorium

The court will take up a bunch of petitions on Wednesday demanding waiver of interest, or waiver of interest on interest on the suspended EMIs during the moratorium period.