The government on Tuesday told the Supreme Court that the moratorium on repayment of loans allowed during the coronavirus crisis can be extended by two years. This came a day after the government's deadline for temporary relief on loan repayments ended. The Reserve Bank of India had allowed banks and other financial institutions to offer a six-month moratorium to all existing individual and corporate term loan borrowers until August 31.
Solicitor General Tushar Mehta, representing the government, told the Supreme Court that discussions were on with the central bank and the bankers' association to arrive at a solution on the issue of waiving interest on loan dues during the moratorium period. "There are more issues involved, GDP is down 23 per cent and economy is stressed," said the government lawyer.
"The lordship may go through it, the matter may be taken up tomorrow or day after tomorrow. The interest on interest part, we have discussed with the RBI officers," Mr Mehta said.
"I am saying with a great sense of responsibility. Harish Salve also spoke with the bankers' association. Most of the issues are addressed," the Solicitor General said.
"We have also to hear the interest in interest part also," said Justice MR Shah, one of the judges. The top court will take up the case again on Wednesday.
The Supreme Court had last week sought the government's stand on waiving interest on loan repayments during the moratorium, saying it "cannot hide" behind the RBI.
The RBI had informed the court earlier that there cannot be an interest waiver on term loans as the financial health and stability of banks would be at risk.
A bench headed by Justice Ashok Bhushan was hearing petitions filed by Gajender Sharma and lawyer Vishal Tiwari seeking to extend the moratorium period to help borrowers in deferring their EMI payment on term loans amid the pandemic.