On Monday, the Supreme Court will hear a Public Interest Litigation (PIL) about borrowers’ financial stress during Covid-19. Vishal Tiwari, a lawyer, has filed a Public Interest Litigation (PIL) asking the Centre to take steps to alleviate the financial stress.
Justices Ashok Bhushan and MR Shah will sit on a two-judge vacation bench to hear the petition.
The PIL requested that the Centre issue a directive allowing all lending (financial) institutions to grant an interest-free moratorium on term loans and defer payment of loan instalments for a period of six months or until the situation from Covid-19 returns to normal.
It has also requested that the Centre issue a directive to banks and other financial institutions not to take strict action against a borrower’s property for six months, citing the difficult lives of daily wage earners who have been affected by pandemic-related lockdowns.
“Their financial burden should be decreased and citizens should not lose their dignity. Financial policies are made by the government but in the present time above financial policies, the question is of survival. And the population of our nation should survive with dignity and without any stress,” the petitioner said in his plea.
In March of this year, the Supreme Court ordered banks not to charge borrowers any penal interest or compound interest (interest on interest) on loans during the Covid-19 pandemic-related moratorium on loan repayment from March to August 2020.
Individuals and trade associations asked for a waiver of all interest during the moratorium, but it was denied.
Any penal interest or compound interest charged by banks for non-payment of any loan amount during the moratorium period will be refunded, according to the court. If the bank is unable to refund, the amount will be deducted from the loan amount, it added.
The court stated that economic policy decisions should be left to the government, and that courts should not intervene even if a second opinion is available.
