The Supreme Court on Tuesday had directed the banks that there should be no interest over the interests and the penal interests. However, this comes after the loan moratorium period from March 1 to August 31 last year.
Supreme Court Suggest Interest To Be Adjusted In Next Installments
A bench of Justices include Ashook Bhushan, MR Shah and R Subhash Reddy said that there was no rationale behind the Central government’s policy to restrict the benefit of the interest to be waived along with compound interest. Last year, the Central government decided to allow the waiver of interest in eight specific loan categories.
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During the hearing, the court said that it was not possible to completely waiver the compound interest as banks are also liable to pay interests to the depositors and pensioners. The court has further directed the Centre to come out with a policy decision that can accomodate the compound interest. However, it may only be charged in cases of deliberate and wilful default.
At the same time, the court has also rejected the plea from the borrowers regarding the extension of the six-month loan granted by the Reserve Bank of India amidst the coronavirus pandemic. The bench also received a plea to provide sector-wise relief by the RBI but they had rejected that as well.
Supreme Court Upholds Economic Policies Outside Judiciary’s Juridictions
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The bench also said that the extend and the manner in which the economic packages are provided are only under the jurisdictions of the Executive. They said that the economic and fiscal policies cannot come under judicial review. This means only if a certain sector is not satisfied with a certain policy, does not give enough reasons for court interference.
The bench observed that the government has suffered tremendous losses because of the pandemic and more losses in the GST revenue.
