SC Asks About Compound Interests during Moratorium

Solicitor General submitted that Government of India is on the highest level considering all issues which have been raised in this batch of cases.

Solicitor General further submitted that Government of India also considering all issues in consultation with Reserve Bank of India as well as other banks. Within a
period of two weeks, an appropriate decision will be taken with regard to the issues, which have arisen herein and the manner and mechanism of extending the benefit to different sectors.

The Petitioners shown their concern with with regard to individual loans, apart from other sectors. It was submitted that individuals are more adversely affected during this period of pandemic. Further the banks are debting interest as well as interest on interest from the accounts of the creditors. Also, the credit rating is also being downgraded which may have adverse effect, with regard to various account holders.

On the strength of the aforesaid submission, Petitioner prayed that the status, as was continuing till 31.08.2020, may be allowed to continue till the matter is considered by the Government and appropriate decisions have been taken.

After hearing all the submissions, the Bench of Justice Ashok Bhsuhan, R.Shubhas Reddy and Justice M.R. Shah, granted two weeks time to the Center to to file appropriate affidavit to reply the issues which have been raised before the Court. The Court further directed that all decisions taken by the Government of India, Reserve Bank of India or the different banks should be placed before the Court for consideration.

The Court also directed that on the next date of hearing, the specific instructions with regard to charging of compound interest and credit rating/downgrading during Moratorium Period shall be obtained, so that appropriate order be issued on the next date of hearing.

On the last date, the Supreme Court granted interim protection by providing that Loans will not become NPA till next date of listing. [Read Here}. The top court had also initially observed that the situation has arisen because the Government locked down the whole country [Read Here].

Now the matter has been adjourned for September 25. The Court has granted RBI further time to file reply.