Union ministry and RBI if deferment of payments on account of the 6 month loan moratorium will entail accural of interest on interest.
Bench comprising of justice Ashok Bhushan, SK Kaul and MR Shah asked, wheather the payment will impose interest on interest or not.
The bench observed that the measure should be wide in nature.Our question in this proceedings is only whether the interest that has been deferred will be added to charges payable later and whether there will be interest on the interest.
Finance ministry is conducting a meeting with RBI regarding this issue. The SBI has submitted that all the banks are of the view that interest cannot be waived for 6 month period.
RBI has filed a counter affidavit stating that waiver of interest will affect the financial health of lending institutions. Previously the bench has observed that accrual of interest while allowing moratorium is detrimental.
