Loan moratorium period extendable by 2 years: Centre & RBI to Supreme Court

Guwahati: The Centre on Tuesday told the Supreme Court that the moratorium on repayment of loans allowed during the COVID-19 crisis can be extended by two more years. This came a day after the government's deadline for temporary relief on loan repayments ended.

To ease burdens, the Reserve Bank of India had allowed banks and other financial institutions to offer a six-month moratorium to all existing individual and corporate term loan borrowers until August 31 of this year.

Solicitor General Tushar Mehta today told the SC that discussions were on with the central bank and the bankers' association to arrive at a solution on the issue of waiving interest on loan dues during the moratorium period.

Mehta said that there are more issues involved as the GDP is down 23 percent and the economy is stressed. The top court will take up the case again on Wednesday.

The apex court had last week sought the government's stand on waiving interest on loan repayments during the moratorium.

The RBI had informed the court earlier that there cannot be an interest waiver on term loans as the financial health and stability of banks would be at risk.

A bench headed by Justice Ashok Bhushan was hearing petitions filed by Gajender Sharma and lawyer Vishal Tiwari seeking to extend the moratorium period to help borrowers in deferring their EMI payment on term loans amid the COVID-19 crisis.

Moratorium basically means you don't have to pay your EMIs for that time period and no penal interest will be charged. It is not a concession of any kind and is simply a deferment of the payment to provide some relief to borrowers facing liquidity issues