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    RBI circular on loan moratorium challenged in Supreme Court

    RBI circular on loan moratorium challenged in Supreme Court

    RBI circular on loan moratorium challenged in Supreme Court
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    By Ritu Singh   IST (Updated)

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    A public interest litigation (PIL) was filed in the Supreme Court on Saturday against the Reserve Bank of India’s March 27 circular on the three-month moratorium permitted for loan repayments due to the economic impact of the COVID-19 pandemic, terming it an “eyewash”.

    A public interest litigation (PIL) was filed in the Supreme Court on Saturday against the Reserve Bank of India’s March 27 circular on the three-month moratorium permitted for loan repayments due to the economic impact of the COVID-19 pandemic, terming it an “eyewash”.
    The PIL was filed by activist and advocate Amit Sahni, and it seeks the Supreme Court’s directions to ensure that customers are not charged accrued interest for the moratorium period.
    The Reserve Bank of India, on March 27, had permitted all lending institutions to allow a three-month moratorium on repayments of all kinds of installments, including for credit cards, for all term loans outstanding between March 1, 2020 and May 31, 2020. A similar three-month deferment for all working capital loans to help borrowers tide over the coronavirus related economic hardships was also permitted.
    The catch in this relief was that interest would continue to accrue during the three-month moratorium, which would additionally have to be borne by a customer if he/she chose to avail of the benefit.
    The petition filed in the top court seeks that no interest be charged during the moratorium as citizens were facing “extreme hardship, whereby business and work have come to a halt and the entire market has crashed,” and that there was no sense in paying additional interest along with the regular EMIs.
    The PIL further says that during such difficult times, the state must not look to enrich itself, and has also sought SC directions to both the RBI and the government to consider even extending the moratorium period for loan repayment for longer. ​
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