Supreme Court announced the Loan Moratorium Case decision and offered more relief to the banks and little to consumers. The court also clarified that moratorium period will not be extended beyond 31st August 2020. While offering relief to people court instructed banks for not to charge interest on interest from customers opted for moratorium. If banks already charged interest on interest then they have to refund the amount to the customers.
Court also said that differed EMI doesn’t mean that EMI cancelled and not changed in future. Customer will pay the EMI after moratorium period as before. Supreme Court also denied any further financial relief to customers in Loan Moratorium Case. Now customers has to pay the all pending EMIs regularly and bank has all option to collect their landings. In case of no payment of regular EMIs beyond 31st August customers will be pushed in to defaulters list as before.
Supreme Court comment on moratorium policy while hearing the loan moratorium case
While hearing the Loan Moratorium Case, court said that there is a limited scope for judicial review on governments economic policy and its decisions. The court will not debate academic matters of trade and commerce. It is not courts job to decide which public policy could have been better. The court said that the government decides the economic policy based on the opinion of the experts from RBI. Any change or restructuring of government policy has to be done by them.
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Court further said that economic expertise cannot be expected from the court. Even if the policy has different views, than too court cannot interfere and determine the strength of economic policy. Court is not an advisors to the Center Govt on Economic Policy. While addressing to government argument, court said to government that it has to take care of public health, jobs etc. Court also said that government has incurred huge losses during pandemic and we have to consider that in account while expecting relief. This Loan Moratorium Case judgment was delivered by a bench of Justices Ashok Bhushan, Justice R. Subhash Reddy and Justice MR Shah.
What is Loan Moratorium Case and what is offered in this scheme to people
During the start of coronavirus pandemic and strict lockdown last year in the country. The government of India decided to offer loan borrowers a relief in their monthly EMIs. Reserve Bank of India (RBI) offered a moratorium period of 3 month to the loan borrowers from 1st March 2020. Later this scheme was extended for another three months and lasted on 31st August 2020. In this Loan Moratorium Case customer had a choice to postpone their EMIs during this period. Customer got protection for not adding their name in defaulters list due to non payment of EMIs during moratorium period.
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But soon after the end of moratorium period customer started complaint about banks additional interest charged on EMIs. Bank started charging compound interest on interest from customers opted for EMI postpone during moratorium period. The consumers knocked the door of court and ask for clarity in this regard. When matter reached to Supreme Court, they asked the centre government why banks are changing interest on interest. Then the government file and reply in court and said that bank will not charge the interest on EMIs upto 2 Crs as per Loan Moratorium Case and policy.
What was Modi Government stand on policies after announcement
The government looks confused on Loan Moratorium Case because no clear guideline was issued for borrowers and banks. Many borrowers thought that EMI is deferred and nothing has to be paid for this benefit. Bank thought EMI is differed but bank can charge interest for the moratorium period. The government no clarity on this issue has increased confusion between bank and borrowers.
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By the way current government is known for its confusing policy and not sharing final results of its policy outcome. Government earlier decision for implementing demonetisation is unknown till date. Even people doesn’t know what government achieved with demonetisation where 100s lost their life and millions lost the jobs and business. Similarly half cooked GST implemented which still has issues and inconvenience. You must know that such policies of government killed the MSME, SME and large number of organised job in the country. But still government keep announcing such confusing policy. Don’t know for whom to benefit.
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