Today the Supreme Court while hearing a bunch of Petitions seeking waiver of interest on loan during the period of Moratorium, granted interim relief to the effect that the accounts which were not declared NPA till 31.08.2020 shall not be declared NPA till further orders.
The Top court has granted this protection in the wake of the suspension of financial activities during the lockdown imposed by the Government of India to curb the spread of COVID-19. The Court is hearing the Petition on the issue that Whether imposition of interest on loan during the moratorium period granted by RBI is valid or not?
Earlier in a separate litigation before the Bombay High Court, the Reserve Bank of India submitted before the Court that, RBI is considering to extend the period of Moratorium form another period of 6 months. (Read Here)
The main grievance of the Petitioners is that they have not been granted sufficient financial protection by the Government amidst COVID-19 effects. The ground is that the Moratorium and Penal Interest cannot go together.