At a time when people's businesses and earnings are being adversely impacted by COVID-19, India's Supreme Court has raised concerns over the rates of interest banks are charging during the lockdown.
The Supreme Court was hearing a petition against charge of interest in the loan moratorium scheme offered by the RBI. The regulator had offered a moratorium on all term loans for six months beginning March, as a relief to debtors amid the pandemic. However, interest will continue to be charged to all those who opt for the scheme and payment will have to be made after the moratorium ends.
"These are not normal times. On one hand moratorium is granted but on the other interest is being charged," the Supreme Court's three judge bench of Ashok Bhushan, M R Shah and Sanjay Kishan Kaul observed while hearing a petition on Thursday.
RBI maintained that foregoing interest will lead to loss of about $20 billion which is around one percent of the country’s annual Gross Domestic Product.
The Supreme Court has issued notice to the Indian ministry of finance to reply on the amount of loss to the banks should interest paid during this period be waived.
The court observed that there are the dual issues of interest being charged as well as bank charges related to the amount of interest charged during the lockdown. The next hearing on the matter is scheduled for June 12.