EMI Moratorium: SC hearing deferred till Sept 28, last order asking banks not to declare accounts as NPAs for 2 months to continue

New Delhi: The Supreme Court on Thursday (September 10) heard a batch of pleas on the issue of charging of "penal' interest on deferred EMI payments by banks under the moratorium scheme during the COVID-19 pandemic.

A bench headed by Justice Ashok Bhushan, has deferred the hearing of the petitions till September 28, during which it has asked the Centre and the Reserve Bank of India (RBI) to come with a concrete decision. Meanwhile, apex court's order asking banks not to declare accounts as non-performing assets (NPAs) for two months will continue. In the last hearing, the SC had ordered banks to refrain from declaring loan accounts that were not NPAs prior to August 31 as NPAs.

On March 27 the had RBI permitted all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) (referred to hereafter as “lending institutions”) to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020.

In May, the RBI announced extension of loan moratorium by 3 more months to August 31.

Petitioner Gajendra Sharma has sought a direction to declare portion of the RBI`s March 27 notification as ultra vires to the extent it charged interest on the loan amount during the moratorium period.