Loan moratorium can be extended for up to 2 years: Centre tells SC

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Loan Moratorium (Image:
Loan Moratorium (Image:

New Delhi : The Centre on Monday told Supreme Court that the loan moratorium period can be extended by two years as per a Reserve Bank of India circular. This comes a day after the moratorium - or temporary relief - on loan repayments allowed to lenders due to the coronavirus pandemic ended.

Solicitor General Tushar Mehta, representing the central government, appealed in court to lend some more time to discuss the matter with the Central bank and the bankers' association and arrive at a solution on issue of waiving interest on interest during the loan moratorium period. "There are more issues involved, GDP is down 23 per cent and economy is stressed," he said.

"The lordship may go through it, the matter may be taken up tomorrow or day after tomorrow. The interest on interest part, we have discussed with the RBI officers," Mr Mehta said.

"I am saying with a great sense of responsibility. Harish Salve also spoke with the bankers' association. Most of the issues are addressed," the Solicitor General said.

"We have also to hear the interest in interest part also," said Justice MR Shah, one of the judges in the three-judge bench hearing the matter.

Last week, the Supreme Court had asked the Centre to file their response over PILs filed to waive off interest on loans during the moratorium period.

The RBI had informed the court earlier that there cannot be an interest waiver during moratorium on repayments of term loans as such a move will put the banks' financial health and stability at risk.