A Petition was filed in the Supreme Court by an Advocate and an Activist Amit Sahni to set aside the March 27 circular. The Circular was issued by RBI to all financial institutions stating the interest shall accrue on the outstanding portion of the term loans during the moratorium period (March 2020 to May 2020), however, the EMIs for these months could be paid in the month of June.
The plea states that
“State cannot enrich itself nor permit anyone to enrich from the unfortunate situation by charging interest for moratorium period.”
The plea stated that the setting aside of Circular of March 27 should be done in a way that the cumulative EMIs to be paid in June is not waived off but the interest to accrue during the moratorium period is not deducted.
“The petition does not stress that the EMIs for moratorium should be waived but the relief required is that there should be no interest upon the EMIs (not paid) during the moratorium period.”
The plea mentions that moratorium “is an eyewash as it provides that the interest shall be chargeable during the moratorium period and that the accumulated accrued interest shall be recovered immediately after the completion of Moratorium Period” despite being a legal authorization to debtors to postpone payment.
Adv. Sahni stated some examples explaining how the scheme by RBI would impact consumers:
Impact on auto loan:
For a loan of Rs 6 lakh with a remaining maturity of 54 months, the additional interest payable would be Rs 19,000 nearly equal to an additional 1.5 EMIs.
Impact on home loan:
For a loan of Rs 30 lakh with a remaining maturity of 15 years, the net additional interest would be nearly Rs 2.34 lakh equal to 8 EMIs.
The petition prayed that the “state cannot enrich itself or permit any other organization or institution to be enriched particularly when it is dealing with an Emergency”, and that “it would not be fair to permit Banks/Financial Institutions to charge interest on the outstanding amount for the Moratorium Period, when citizens cannot work to comply the Government’s instructions and are compulsorily incapacitated to generate funds.”
The petition also prays for the extension of the Moratorium period.
