Loan moratorium can be extended for two years: Centre, RBI to Supreme Court

The Central government on Tuesday told the Supreme Court that the moratorium scheme which ended on August 31, can be extended by two years in view of the COVID-19 pandemic.

A bench headed by Justice Ashok Bhushan was hearing petitions filed by Gajender Sharma and Advocate Vishal Tiwari seeking to extend the moratorium period.

Solicitor General Tushar Mehta on behalf of the Centre and RBI told the apex court that a fresh affidavit has been filed in the SC on the issue. He said, Centre, RBI, and Bankers association are working to identify the distressed sectors and a formal decision was yet to be taken.

The Supreme Court had last week asked the government to intervene and sought their stand on waiving interest on loan repayments during the moratorium, saying it cannot hide behind the RBI.

The Reserve Bank Of India (RBI) had allowed banks and other financial institutions to offer a six-month moratorium to all existing and corporate term loan borrowers until August 31 but RBI had informed the court earlier that there cannot be an interest waiver on term loans as the financial health and stability of banks would be at risk.