Can banks reject moratorium?

The Supreme Court on Tuesday ruled that banks cannot charge interest on interest for accounts that sought moratorium relief during the pandemic period last year and the amount so collected must be refunded in the next instalment of the loan account.

What today’s Supreme Court order on loan moratorium means for banks?

Further, the court ruled that the banks cannot charge interest on interest (compound interest) on the outstanding loans during the moratorium period of 1 March to 31 August, 2020. …

What is Supreme Court decision on moratorium?

The Supreme Court last month directed that no compound or penal interest shall be charged from borrowers for the six-month loan moratorium period, which was announced last year amid the COVID-19 pandemic, and the amount already charged shall be refunded, credited or adjusted.

Is moratorium extended today?

RBI extends EMI moratorium for another three months on term loans. The current EMI moratorium on all the term loans is ending on August 31, 2020. Previously the EMI moratorium was given for three months i.e. between March and May 2020.

Is interest charged in moratorium period?

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 moratorium was intended to provide borrowers relief during the COVID-19 pandemic, enabling them to defer payments on EMIs.

What does RBI’s moratorium on EMI payments mean for borrowers?

In a relief to borrowers who could be facing liquidity issues in paying their equated monthly installments (EMI) amid the nationwide lockdown, the Reserve Bank of India (RBI) on Friday allowed banks and other financial institutions to provide a moratorium of three months to all term loan borrowers.

When will the moratorium on loan EMIS end?

It also declined to extend the moratorium till December 2020 or, as some of the petitioners sought, another six months from August 31, 2020. The court said a total waiver of interest on loan EMIs would hit the banks and depositors hard.

What is the loan moratorium case?

The Central Government has filed its detailed affidavit before the Supreme Court in connection with the loan moratorium case where it has stated that the interest waiver scheme can be availed by borrowers in specified loan accounts for a period from March 1 to August 31, 2020.

Will moratorium be applicable on principal or interest repayment?

Will moratorium be applicable on principal repayment, interest repayment or both? The moratorium will be applicable to both principal and interest, that is wherever you are paying either EMIs or Pre EMIs. The interest, at the applicable interest rate, shall keep on accruing on the outstanding portion of the loan during the moratorium period.