Supreme Court rejects the pleas from various trade associations and corporate bodies to extend the six-month loan moratorium period offered by the Reserve Bank of India. SC said granting relief such as an interest waiver or extension of a loan moratorium can have far-reaching consequences for the economy.

A Supreme Court bench ruled that it cannot direct the government or the central bank to announce particular financial relief or packages, nor can it ask relief for particular sectors.


Supreme Court has turned down the pleas from various trade associations and corporate bodies seeking an extension of the six-month loan moratorium offered by the Reserve Bank of India. A bench headed by Justice Ashok Bhushan had reserved its verdict on these pleas on December 17 last year.

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To the relief of borrowers, the apex court ruled that there will not be any interest on interest or penal interest on any amount during the moratorium.

The RBI had on March 27 issued the circular which allowed lending institutions to grant a moratorium on payment of installments of term loans falling due between March 1 and May 31, 2020, in view of the coronavirus pandemic. The moratorium was later extended till August 31, 2020.

The moratorium was intended to provide borrowers relief during the COVID-19 pandemic, enabling them to defer payments on EMIs. In October 2020, the central government announced a waiver of compound interest charged during the moratorium period on certain categories of loans of up to ₹2 crores.

If the banks were to bear this burden, then it would necessarily wipe out a substantial and a major part of their net worth, rendering most of the lenders unviable and raising a very serious question mark over their very survival, it had said.




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