Supreme Court Rejects Petition Asking For Fresh Loan Moratorium

The Supreme Court on Friday rejected a public interest litigation (PIL) demanding fresh moratorium on loan repayments in view of the second wave of Covid-19. The top court declined to pass an order on fresh loan moratorium and said the issues raised in the petition are in the realm of policy decisions.

The Supreme Court, however, said it is up to the government to assess and pass an appropriate order.

Last year, the Reserve Bank of India announced moratorium on loan repayments after the government imposed a nationwide lockdown to curb the spread of Covid-19 pandemic.

The moratorium on all term loans, including home, auto and crop loans, was announced to help customers overcome financial difficulties due to the coronavirus outbreak and subsequent nation-wide lockdown.

Last month, the Reserve Bank of India re-opened its one-time loan restructuring plan for individuals and small businesses affected by the state-wise lockdowns amid the second wave of coronavirus pandemic that has hit India badly. Individuals, small business and micro, small and medium enterprises (MSMEs) having exposure of up to Rs 25 crore, who did not avail restructuring earlier and where loans were classified as standard as on March 31, 2021 were eligible for loan restructuring in the second round.

Restructuring under the proposed framework may be invoked up to September 30 and will have to be implemented within 90 days thereafter, Mr Das said.

"Resurgence of Covid-19 pandemic in India in recent weeks and the associated containment measures adopted at local and regional levels have created new uncertainties and impacted the nascent economic revival that was taking shape. In this environment, the most vulnerable category of borrowers are individual borrowers, small businesses and MSMSEs," RBI Governor Shaktikanta Das said in a speech last month.