SC Notice to RBI On Plea Challenging Charging of Interest During Moratorium

The Supreme Court of India issued the notice to the centre and the RBI on plea challenging charging of interest on loan after three months of moratorium period granted by the RBI which has now extended up to 31st August.

The Petitioner Gajendra Sharma filed the case challenging charging of Interest on loans after Reserve Bank of India granted three months moratorium on the payment of EMI’s till 31st May 2020 which has now extended to 31st August 2020.

On March 27, RBI had permitted all financial institutions to give moratorium period of three months on all type of instalments, loans taken and also for credit cards outstanding between March 1st to May 31st to assist people during the economic slowdown caused due to coronavirus.

The pleading says that it’s unconstitutional to charge EMI’s after the order has been passed by the RBI. It also includes that due to lockdown people are facing financial problems and hence the pressure put down by the banks irrespective of the orders causing hindrance and also infringes their Right to Life which is guaranteed under Article 21 of the Indian Constitution.

Solicitor General, Mr Tushar Mehta appeared on the behalf of the Reserve Bank of India and said: “RBI is yet to respond.”

Sr. Advocate Rajiv Dutta appearing on the behalf of the petitioner said “3 months were given first which is now being extended by 6 months. When the Supreme Court decides this matter, the accounting can be done. Today, please give me relief. Don’t penalise me today. Don’t add my interest and start charging compounded interest”    

The three-Judge Bench consist of Justice Ashok Bhushan, Justice Sanjay Kishan Kaul, Justice M.R. Shah gave one week time to the RBI to respond on the aforesaid issue.

On April 30th, the Supreme Court passed the order asking RBI to ensure that their loan moratorium policy permitting exemption from EMI’s and other loans during COVID 19 should be implemented by the banks wisely.