New Delhi: The Reserve Bank of India has filed a fresh affidavit in the Supreme Court in the loan moratorium case. In the affidavit, the Reserve Bank of India (RBI) has said that it is not possible to provide more relief to the people affected by the pandemic. The bank has also said that it is not possible to extend the loan moratorium beyond six months.
The RBI stated that “a loan moratorium of more than six months may also affect the credit behavior of borrowers. The overall debt discipline will be eliminated, which will have a bad impact on the process of debt creation in the economy. This may impact small borrowers more, as their access to formal lending channels is dependent on the credit culture. “
The next hearing in the loan moratorium case will be held on October 13 in Supreme Court. The Supreme Court on Monday said that the affidavit filed by the Center regarding the ‘Interest on Interest’ waiver is not satisfactory. The court has asked the Central Government and Reserve Bank of India to file a fresh affidavit. In the affidavit filed earlier, the central government had asked to waive ‘interest on interest’ on loans up to Rs 2 crore. The burden will be borne by the Central Government itself, which is estimated to be Rs 5,000 to 7,000 crore.
The apex court was hearing petitions seeking interest waiver on payment of equal monthly installments (EMI) between March and August 31, which was announced by the Reserve Bank of India (RBI) due to the lockdown declared by COVID-19 pandemic. The court asked the central government and RBI to keep various schemes and policy guidelines on record so that the scheme could be implemented. The Central Government had filed an affidavit in the Supreme Court stating that it would waive the interest on interest incurred during the period of the moratorium for certain loans including small business, education, housing and credit cards.