RBI asked to clarify on interest during moratorium

“We are trying to balance. Whether there can be a system worked out... Our concern in these proceedings is only whether the interest that has been deferred will be added to charges payable later and whether there will be interest on the interest,” Justice Kaul addressed lawyers representing the parties.

The court said, unlike what the RBI apprehends in its response, it is not considering a complete waiver of interest but is only concerned that postponement of interest shouldn't accrue further interest on it.

The court listed the case for June 17 to hear the outcome of the meeting between the RBI and the Finance Ministry.

Earlier, the RBI had filed an affidavit in court saying it does not consider it prudent or appropriate to go for a forced waiver of interest, risking the financial viability of the banks it is mandated to regulate and putting the interests of the depositors in jeopardy.

“If the RBI reply goes much beyond the query posed by us, there will be a lot of opinions on it. Efforts will be made to sway it one way or another,” the Bench remarked.

The court is hearing a petition filed by Gajendra Sharma challenging the charging of interest rate on loans even during the three-month moratorium period declared amid the COVID-19 pandemic and national lockdown.

The RBI had recently extended the moratorium till August 31.

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