Supreme Court issues notice to RBI, Centre on plea against charging interest on loansWed May 27 2020 / By: Rashmi
Almost every bank customer was happy when RBI announced that it is going to give loan borrowers a moratorium period of three months. But, there was a catch. The payment of the principal amount was postponed, but borrowers still had to pay interest on the unpaid principal amount.
But this may change. A person has filed a petition saying that banks should not charge interest from customers during the moratorium period.
The Reserve Bank of India announced in April that the banks could not force their customers to pay the loan EMIs or Credit card dues for a period of three months, i.e., from March 1, 2020, to May 31, 2020.
Later, RBI extended the moratorium period to six months. Now, the customers don't have to pay the EMIs up to August 31, 2020. But, the loan borrowers are still facing problems as they are not even able to pay interest money. One such customer, Mr. Gajendra Sharma, filed a petition in Supreme Court against the charging of interest during the moratorium period.
The Supreme has directed the Central government and the Reserve Bank of India to file their response regarding the case.
What Exactly Is The Petition?
Gajendra Sharma said that giving the option of a moratorium without wavering the interest means giving something with one hand but taking away the same with another hand.
The petitioner used strong words while making his plea. He called the charging of interest a "devastating, wrong, arbitrary, and capricious."
"In the present scenario, when all the means of livelihood has been curtailed by the government of India by the imposition of complete lockdown pan India, due to worldwide outbreak of Covid-19 pandemic and the petitioner being a citizen of India has no way to continue his work and earn livelihood, imposition of interest during the moratorium will defeat the purpose of permitting moratorium on loans." says Gajendra Sharma in his petition.
What If The Petitioner Wins?
The petitioning lawyer said that the moratorium period would end on August 31, which means that if they win the case, then banks will have ample time to reschedule the loan payments.
The government and the Reserve Bank have a time of one week to file their response to the Supreme Court. The case seems stronger on the side of the petitioner.
If the Supreme Court rules in favour of Gajendra Sharma, borrowers will save a large sum of money, which otherwise they would have paid to the banks in the form of interest. We will update the news as soon as the court decides on the matter.
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