![\"\"](\"https:\/\/blog.ethicallegal.in\/wp-content\/uploads\/2021\/04\/Divorce-Lawyer-Faridabad-Ethical-Legal-Consultants.jpg\")
<\/figure>\n\n\n\nThe\nCourt observed that compound interest is chargeable on wilful or deliberate\ndefault by the borrower to pay the due installments. So, when the\ninstallments have been deferred based on the moratorium declared by the RBI,\nthe non-payment of installments cannot be termed as willful. Therefore,\nthere is no justification in charging compound interest, which is in the nature\nof a penal interest, during the moratorium period, the Court said.\n<\/p>\n\n\n\n
The\nSupreme Court made these observations while disposing off a batch of petitions\nwhich sought various reliefs such as waiver of interest, extension of\nmoratorium etc. <\/p>\n\n\n\n
The\nbench observed that there is no rationale in the Centre’s policy to limit the\nbenefit of waiver of compound interest only to certain loan categories\nless than Rs Two Crores. Last year, the Centre had taken a decision to allow\nwaiver of interest on interest in eight specified categories for loans\nup to Rupees 2 crores.<\/p>\n\n\n\n
The\ncategories in which the Centre and the RBI agreed to waive compound interest\nduring the loan moratorium period are :<\/p>\n\n\n\n
- Education loans up to Rs. 2 crore<\/li>
- Housing loans up to Rs. 2 crore<\/li>
- Personal loans to professionals up to Rs. 2 crore<\/li>
- Consumer durable loans up to Rs. 2 crore<\/li>
- MSME loans up to Rs. 2 crore<\/li>
- Credit card dues up to Rs. 2 crore<\/li>
- Automobile loans up to Rs. 2 crore<\/li>
- Consumption loans up to Rs. 2 crore<\/li><\/ul>\n\n\n\n
At the same time, the Court observed that it was not possible to order complete waiver of interest during the loan moratorium period, as the banks have to pay interest to depositors, pensioners etc. Banks have to meet administrative expenses as well. There may be several welfare funds schemes, category specific and sector specific which might be surviving and are implemented on the strength of the interest generated from their deposits. <\/p>\n\n\n\n
.<\/p>\n\n\n\n
.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Supreme Court has observed that there is no justification for charging compound interest or penal interest during the period of loan moratorium which was allowed by the Reserve Bank of India from March 1 to August 31 last year on account of the COVID19 pandemic. The Court observed that compound interest is chargeable onRead more about CHARGING OF COMPOUND INTEREST IN NATURE OF PENAL INTEREST FOR LOAN MORATORIUM PERIOD NOT JUSTIFIED – SUPREME COURT<\/span>[…]<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.ethicallegal.in\/wp-json\/wp\/v2\/posts\/376"}],"collection":[{"href":"https:\/\/blog.ethicallegal.in\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.ethicallegal.in\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.ethicallegal.in\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.ethicallegal.in\/wp-json\/wp\/v2\/comments?post=376"}],"version-history":[{"count":2,"href":"https:\/\/blog.ethicallegal.in\/wp-json\/wp\/v2\/posts\/376\/revisions"}],"predecessor-version":[{"id":379,"href":"https:\/\/blog.ethicallegal.in\/wp-json\/wp\/v2\/posts\/376\/revisions\/379"}],"wp:attachment":[{"href":"https:\/\/blog.ethicallegal.in\/wp-json\/wp\/v2\/media?parent=376"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.ethicallegal.in\/wp-json\/wp\/v2\/categories?post=376"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.ethicallegal.in\/wp-json\/wp\/v2\/tags?post=376"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}