The SC said no direction can be issued to the govt or RBI to announce any particular financial packages or reliefs, and held that it cannot issue directions to provide relief to particular sectors over and above others.
A bench comprising Justices DY Chandrachud, MR Shah and Sanjiv Khanna pronounced the judgement on the loan moratorium and waiver of interest. A bench headed by Justice Ashok Bhushan had earlier reserved its verdict on the batch of pleas on December 17 last year.
The apex court furthermore directed that there shall be no interest on interest or penal interest on any amount during the loan moratorium from any borrower.
The RBI had on March 27, 2020 offered moratorium on loan instalments accrued during March 1 to May 31, 2020 – later extended to August 31 – during the nationwide lockdown. The central bank had earlier also permitted lenders a one-time loan restructuring without classifying them as non-performing assets to curb financial stress.
The SC in September 2020 had ordered that accounts that were not NPAs as on August 31 should not be classified as such until further orders. A month later in October, the Centre announced waiver of compound interest charged on certain categories of loans of up to Rs 2 crore.
The Centre had submitted that if it were to consider waiving interest on all the loans and advances to all categories of borrowers for the six-month moratorium period announced by RBI, then the amount foregone would be more than Rs 6 lakh crore. If banks were to bear the burden, it would wipe out a substantial part of their net worth, rendering most of the lenders unviable and raising a serious question over their survival.
