• surajit bhowmick

Loan moratorium will not be extended: Supreme Court

The 6-month loan moratorium period that was offered by the Reserve Bank of India (RBI) will not be extended anymore, said the Supreme Court.

Loan moratorium

Various trade associations and corporate bodies had pleaded for an extension.

Under the loan moratorium, the RBI had said that banks can waive off the interest on loans for customers for a certain period.

The apex court feels that extending such a provision may have negative consequences for the economy.

The court has also clarified that banks cannot levy any extra interest or penal charge on any amount not paid under the moratorium provision.

What is the loan moratorium and when was it implemented?

RBI had offered a moratorium on loan installments for the period between March 1 and May 31 and was later extended to August 31.

Moratorium means a temporary prohibition. Hence a loan moratorium means a temporary pause to pay EMIs.

The moratorium, when announced in March 2020, was intended to provide relief to the borrowers during the pandemic. It let them defer their EMI payments.

In October 2020, the central government announced a waiver of compound interest charged during the moratorium period on certain categories of loans of up to Rs 2 crore.


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