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Opted for Moratorium: Supreme Court Decision That Could Turn It Right For You

Covid-19 may have originated in 2019 but it brought about a critical year 2020 in which we got to see many new and different things. This year has been different in the sense that it shifted the momentum of everything from Sports to politics, finance to digital world, Entertainment to the Real Estate sector.

Well one of the most effected sectors is Real Estate and definitely linked to it is the relationship between Public or Private sector Banks and the Public who they serve with different types of Loans and other services. One of the new Words introduced in this relationship has been "Moratorium" on Loan payments.

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Moratorium on of the new words among the many we learnt this year due to the pandemic refers to "A delay in the payment of debts or obligations."

As the Pandemic began its effect on the Second largest Populated country in the world, the Goverment immediately gave a 3 month Moratorium relief to the public on all types of Loan Payments which was further extended by 3 months and got over on 31st Aug 2020.

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So a General Reminder would be to be ready to pay your Loan EMI this Month otherwise you may encounter heavy Penalties.

But a Good news from Supreme Court for all those who took Moratorium may be around the corner.

The Supreme Court is Hearing Petitions whether the Interest and Interest on Interest for the EMIs not paid during Moratorium Period of 6 Months should be Waived off. Well it will mean a loss of 1 Lakh Core and more for the Banks but it will mean a lot more to all those in Public who suffered job and Income Losses due to Covid-19 during these 6 Months. 

The Latest update is that Supreme Court Justice Bhushan observed that banks should not declare accounts as a non-performing assets (NPA) for two months and banks must not take coercive action against borrowers.

Here are updates so far from the Hearing:

  • As per Solicitor General Tushar Mehta on September 3rd, the idea of the moratorium was to delay EMIs to ease the burden caused by COVID induced lockdown so that public and buisnesses can manage loss of Income. The idea was not to waive off interest. 
  • As per Senior Advocate Harish Salve appearing for Indian Banks Association on September 3,  Individual and industrial problems need different solutions. Compound interest is charged as per contract and penal interest is not being charged. Penal compounding interest is the interest on non-payment of EMIs,  .
  • The Supreme Court observed that there charging interest on interest is not justified.
Interest On Loan Moratorium Hearing- Day-2] Live- Updates From Supreme Court
  • As per RBI statement on June 4, banks will lose Rs 2 lakh crore on interest being waived for the moratorium period.
  • Senior Advocate Rajiv Dutta, on September 2 said "interest on interest is absolutely and prima facie wrong and they cannot charge it" while appearing for a petitioner.
Well Interest may get waived off soon as per current proceedings but dont forget to start paying your EMIs from Sep onwards. Keep visiting for further updates on the same.

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