Waiving interest on interest during the loan moratorium period will be against “the basic canons of finance” and unfair to those who repaid loans as per schedule, the government told the Supreme Court on Tuesday. This came a day after the government's deadline for temporary relief on loan repayments ended. The top court had asked the Centre and Reserve Bank of India (RBI) to review the move to charge interest during the moratorium period.
“I respectfully state and submit that ex post facto change in the terms and conditions of the offer of moratorium favouring those who availed of it over those who made the extra effort of repaying as per schedule would be grossly inequitable and patently unfair for those who did not avail of the benefits of moratorium initially or gave it up subsequently," the government said in its affidavit.
The government also told the court that on August 6, the RBI unveiled a scheme providing extension of moratorium for two years to certain borrowers.
The central bank also extended the remaining tenure of the loan, with or without moratorium, by up to two years, waived penal interest and charges, rescheduled repayment, converted accumulated interest into a fresh loan with a deferred payment schedule and sanctioned additional loans, the government added.
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.