SC Loan Moratorium Case LIVE Updates: Apex court bench adjuorns hearing to November 5

Nov 3, 2020 11:06 AM

SC Loan Moratorium Case LIVE Updates: Banks told to credit 'interest on interest' to borrowers, RBI tells SC

Banks, financial and non-banking financial institutions have been asked to take "necessary actions" to credit into the accounts of eligible borrowers by November 5 the difference between compound and simple interest collected on loans of up to Rs 2 crore during the moratorium scheme, RBI has told the Supreme Court. The Reserve Bank of India (RBI), in an affidavit filed through Assistant General Manager Prasanta Kumar Das, referred to the October 23 additional response of the Ministry of Finance and said the federal bank has also acted in pursuance of that by issuing a notification to banks and FIs recently on refund of extra money to the borrowers. The central government had earlier told the apex court that the lenders have been asked to credit into the accounts of eligible borrowers the difference between compound and simple interest collected on loans of up to Rs 2 crore during the RBI's loan moratorium scheme by November 5. "All Primary (Urban) Cooperative Banks/State Cooperative Banks/District Central Cooperative Banks, All All India Financial Institutions and All Non-Banking Financial Companies (including Housing Finance Companies) to be guided by the provisions of the scheme and take necessary actions within the stipulated timeline therein," the RBI said in its recent affidavit.

Nov 2, 2020 10:18 AM

SC Loan Moratorium Case LIVE Updates: Small borrowers constituting 40% bank credit eligible for relief

The Supreme Court has asked the government to implement the decision to waive “interest on interest” or compound interest charged on loans of up to Rs 2 crore for the six-month moratorium period announced in the wake of the COVID-19 pandemic. Analysts believe that these developments in the court are leaning favourably towards financiers and are positive for the sector as there were no discussions on expanding the scope of relief (a huge overhang) to other categories or to interest waiver. Further, a relief on the compounding of interest would benefit small borrowers which constitute around 40 percent of the bank credit.