Centre cannot ‘hide behind’ RBI: SC on loan moratorium.

Centre cannot ‘hide behind’ RBI: SC on loan moratorium.

On Wednesday, Supreme Court asked Centre to clear its stand interest on loan repayments during the moratorium and said it “cannot hide” behind the Reserve Bank of India (RBI).

Supreme Court hit out at Government over a comment that the move would hit businesses and banks, the Supreme Court blamed centre for problems in economy and said: “This happened because you locked down the entire country.”

The Supreme Court asked the government to immediately clear their interest by September 1 on a petition that asks that interest on loan repayment in the moratorium during the coronavirus lockdown be cancelled.

“There cannot be a solution which is one-size-fits-all,” Solicitor General Tushar Mehta said.

“You cannot be interested only in business and not about sufferings of people,” the Supreme Court said, noting that the matter had been hanging for a long time.

“The problem has been created by your (centre’s) lockdown. This is also not the time to consider about the business. The plight of people has to be considered also. You have to tell us your stand on two things: disaster management act and if the interest on interest will be accounted for,” said Justice Ashok Bhushan.

The petitioners said that the interest creates a hardship, hindrances and objection in right to life guaranteed under the constitution thus they wanted some portion of an RBI notification issued on March 27 to be cancelled so that interest could be waived.

However, RBI informed the Court that there cannot be an interest waiver during the moratorium on term loan repayment. They said that the move will put the financial health and stability of banks at risk.

“My Lordships may not say that. We are working in coordination with RBI.” said Mr.Mehta in reply of court’s comment ‘hiding behind the RBI’.

“As on September 1, we will be in default,” said Senior Lawyer Kapil Sibal. He appeared for petitioner and asked for the extension of Moratorium that would end on August 31.

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