The hearing of Supreme Court on loan moratorium has been adjourned for tomorrow

The Supreme Court today heard the petitions on one of the fallouts of the pandemic COVID-19 - loan moratorium of “interest on interest”.

Initially, the government had updated its decision to selectively waive off the interest earned on delayed interest payments during the COVID-19 moratorium.

The government has earlier denied any such waiver because doing so would have hurt the survivability of the banks underwriting the loans. Upon intervention of the Supreme Court, and its guidelines to consider the situation and help the borrowers, the government came up with a plan.

The RBI, then, in a fresh affidavit filed to the Supreme Court, claimed that it is unable to extend loan moratorium beyond the six-month period.

The rationale provided is that such a move “may result in vitiating the overall credit discipline which will have a debilitating impact on the process of credit creation in the economy”. The RBI further said that the move can “increase the risks of delinquencies post resumption of scheduled payments”

Also Read: RBI cannot extend loan moratorium, says economically unfeasible in addition to undermining its ‘regulatory mandate’

Now, the question is on whether any relief beyond the Rs 2 crore is to be given or not.

The Supreme Court today passed over the case for hearing at 12 noon while attending to other cases.

The turn of the case came last and at about 2 pm the case was adjourned for tomorrow.