Supreme Court Allows Waiver Of Compounding Interest On Loans, Refuses Moratorium Extension

The top court said they cannot do a judicial review of the Centre’s financial policy decisions unless they are malafide and arbitrary in its decision on a batch of petitions seeking an extension of the loan moratorium period and other reliefs.

Supreme Court on Tuesday allowed the waiver of interest-on-interest or the compound interest for all borrowers during the six-month loan moratorium period but declined to extend the six-month loan moratorium term offered by the Reserve Bank of India (RBI) last year, citing it a ‘policy decision’ of the Centre and RBI.
“It is directed that there shall not be any charge of interest on interest/compound interest/penal interest for the period during the moratorium and any amount already recovered under the same head, namely, interest on interest/penal interest/compound interest shall be refunded to the concerned borrowers and to be given credit/adjusted in the next instalment of the loan account,” read the order by a three-judge apex court bench.

Leave a Comment