Supreme Court refuses to interfere in Centre's decision on extension of loan moratorium

A bench headed by Justice Ashok Bhushan said the apex court cannot conduct a judicial review of the government's financial policy decisions unless they are malafide and arbitrary, said an NDTV report.

As economic activities hit rock bottom due to coronavirus spread and consequent restrictions in 2020, the Reserve Bank of India announced a loan moratorium on March 27, effective from March 1 till May 31 and later, extended it to August 31, 2020.

The relief covered housing, personal, education, consumer durables and auto loans, loans to micro, small and medium enterprises (MSME) and credit card dues, subject to applicable conditions.

The court also dismissed the pleas seeking complete waiver of interest during the moratorium period pointing out that the banks have to pay interest to pensioners and depositors.

The government was against the waiver of interest during the moratorium period as it would burden the banks with an estimated amount of Rs 6 lakh crores but later proposed to cancel compound interest on loans up to Rs 2 crore for six categories of loans.

The top court ruled that no compound or penal interest could be charged for the moratorium period and the amount already charged should be credited, refunded or adjusted.