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Supreme Court Gives Centre 1 More Week To Submit Loan Moratorium Plan

Supreme Court Gives Centre 1 More Week To Submit Loan Moratorium Plan

The Supreme Court today allowed the government one more week to come up with a plan on loan moritorium to ease the financial burden on borrowers during the coronavirus crisis. The top court was hearing a batch of petitions seeking a waiver of interest on deferred EMIs during the moratorium period, which was introduced by the Reserve Bank of India (RBI) to ease the burden on existing borrowers in wake of coronavirus pandemic-related restrictions.

The top court, which had asked the government to submit its plan on September 28, deferred the hearing till October 5 after the government sought more time.

The decision on the matter is at an advanced state and some more time is required to present the details before the court, the Centre's counsel told the Supreme Court.

In some relief to stressed borrowers, the Supreme Court had ruled earlier this month that loan accounts of borrowers availing the moratorium - or a delay in loan repayments - will not be declared as bad loans till further orders.

The borrowers need to be protected and banks should not take any coercive action against them, the top court had held.

A number of associations representing sectors such as banks and real estate developers are part of the hearings.

While the petitioners demand a waiver of interest on interest (interest for exercising the option to suspend EMIs due to COVID-19), the government is of the view that writing off interest will weaken banks and affect economic conditions.

The Centre and the Reserve Bank of India have told the top court that the loan moratorium can be extended by up to two years on account of the coronavirus-related situation.

The Reserve Bank of India (RBI) had in March granted a three-month loan moratorium due to the pandemic-induced situation, and later extended it till August 31 in May.