- Banks are free to restructure loans but they cannot penalise honest borrowers by charging interest on deferred EMI payments under the moratorium scheme during the coronavirus (COVID-19) pandemic, a petitioner opposing the move said in the Supreme Court.
- A Bench headed by Justice Ashok Bhushan, which commenced final hearing on a batch of pleas raising the issue of interest on instalments deferred under the scheme during the moratorium period, was told that paying interest on interest is a double whammy for borrowers.
- Reserve Bank of India (RBI) came out with the scheme and people thought that they will be paying the EMI after the moratorium period and later they were told that compound interest would be charged and it will be double whammy for them as we will be paying interest on interest.
- The Centre and the RBI had recently told the apex court that moratorium period on repayment of loans during the COVID-19 pandemic is extendable by two years and several steps have been taken to help the stressed sectors.
- The Centre also told the top court that waiver of interest on deferred EMIs during the moratorium period would be against the basic canons of finance and unfair to those who repaid loans as per schedule.
- The Ministry of Finance had filed an affidavit before the court which had asked the Centre and the RBI to review the move to charge interest on EMIs and interest on the interest during the moratorium period introduced under the scheme due to the COVID-19 pandemic.
