Govt Only Thinking Business, Not People: SC on Loan EMI Interests

SC observed that it appears the Centre is hiding behind the Reserve Bank of India’s decision on this issue.

Image of Finance Minister Nirmala Sitharaman used for representational purposes.

(Photo altered by The Quint)

The Supreme Court on Wednesday, 26 August, pulled up the Centre for not taking a stand on waiver of interest on interest during the loan moratorium period during a hearing against financial institutions levying interest on loans while the temporary suspension period was on.

The top court observed that it appears the Centre is hiding behind the Reserve Bank of India’s decision on this issue, especially when it has ample powers under Disaster Management Act, where it can take a decision by stopping the banks from charging interest on deferred EMIs and waive interest on interest for a moratorium period.

A bench comprising Justices Ashok Bhushan, R Subhash Reddy and MR Shah told the Centre that it cannot be interested only in business and not care about the sufferings of people.

The petitioner's counsel informed the top court that the moratorium ends on 31 August, and on 1 September, his client will be in default.

Solicitor General Tushar Mehta, representing the Centre, contended before the bench that the decision was taken on 6 August, that this issue has to be decided as per different sectors.

Justice Bhushan said that will be as good as shelving the issue and the Centre will have to make its stand very clear. Solicitor General informed the top court that Centre is working in association with the RBI to ease out the difficulties for people who have availed loans.

Justice Bhushan observed that the ongoing circumstances happened due to the nationwide lockdown. Justice Shah added this is not the time to think about business only.

The bench said the Centre has to put its stand on affidavit.

The top court granted one-week time to Mehta to file an affidavit clarifying Centre's stand and posted the matter for further hearing on 1 September.

The observation from the top court came on petitions filed by Gajendra Sharma and others against the financial institutions levying interest on loans during the moratorium period.