In a Relief to Borrowers, Supreme Court Extends Loan Moratorium Scheme till September 28

Continuing its interim order, the Supreme Court on Thursday extended loan repayment moratorium till September 28 that directed banks not to declare any loan as NPA (non-performing asset) due to non-payment of installments during the period.

The Reserve Bank of India had come out with the notification in March after the nation-wide lockdown was imposed to curb the spread of the pandemic and had given the facility of deferred payment of installments to borrowers and the scheme had end on August 31.

The apex court had earlier asked the Centre and the Reserve Bank of India (RBI) to review the move to charge interest on EMIs during the moratorium period introduced under the scheme due to the Covid-19 pandemic.

The top court had said there was "no merit in charging interest on interest" for deferred loan payment installments during the moratorium period announced in wake of the Covid-19 pandemic.

Lawyer Vishal Tiwari in his plea had sought a direction to declare the portion of the RBI's March 27 notification as "ultra vires" to the extent it charges interest on the loan amount during the moratorium period and said that it created hardship to the petitioner being borrower and creates hindrance and obstruction in "right to life" guaranteed by Article 21 of the Constitution of India.