Supreme Court: No compound or penal interest during loan moratorium period

New Delhi : In a relief to borrowers, the Supreme Court Tuesday directed that no compound or penal interest be charged during the six-month loan moratorium period announced last year amid the Covid-19 pandemic and the amount already charged shall be refunded, credited or adjusted.

The apex court refused to interfere with the Centre's and the Reserve Bank of India (RBI's) decision to not extend the loan moratorium beyond August 31 last year, saying it is a policy decision.

A bench headed by Justice Ashok Bhushan said that the top court cannot do judicial review of the Centre's financial policy decision unless it is mala fide and arbitrary.

The apex court said it cannot interfere with the government's decision to fix priorities for relief during the pandemic which has affected across the country and the government has been under severe financial constraints.

The bench said this in its verdict on a batch of pleas filed by various trade associations, including from real estate and power sectors, seeking extension of loan moratorium and other reliefs in view of the pandemic.