No compound, penal interest be charged from borrowers during loan moratorium period: SC

New Delhi: The Supreme Court Tuesday directed that no compound or penal interest shall be charged from borrowers for the six-month loan moratorium period, which was 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 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 the top court cannot do judicial review of the Centre’s financial policy decision unless it is malafide 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 all across the country.

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 the loan moratorium period and other reliefs in view of the pandemic.