News

In a writ petition filed in the Hon’ble Supreme Court that no interest should be charged and there should be a waiver of interest on term loan payments during the moratorium, the Hon’ble Supreme Court had issued notice to the Reserve Bank of India. The RBI has now filed a response in the Supreme Court opposing the same and inter alia contending that “waiver on interest during a moratorium on term loan repayment would jeopardize the financial health and stability of banks, as well as the interest of debtors.” Though the deferment has been extended till 31^st of August 2020, the RBI opposes and highlights that in order to help the difficulties that the borrowers may face in repayment of accumulated interest have also announced on 23^rd May 2020 that “lending institutions may, at their discretion, convert the accumulated interest for the deferment period up to August 31, 2020, into a funded interest term loan (FITL) which shall be repayable not later than March 31, 2021.”  In the reply filed by the Reserve Bank of India, it is averred that RBI does not consider it prudent or appropriate to go for a forced waiver of interest, risking the financial viability of the banks, as it is mandated to regulate, and protect the interest of depositors.