In the wake of the coronavirus crisis and the ensuing lockdown, the Reserve Bank of India (RBI) had allowed banks to give relief to borrowers by way of a six-month moratorium on loan repayments.
Now, a petition in the Supreme Court has demanded that interest accrued during the moratorium period should be waived off by banks.
The Supreme court bench even observed that a moratorium without an interest waiver is detrimental to the borrower. However, such a waiver on the interest accrued would have some major unpleasant outcomes.
As a banking consultant puts it, "The spirit behind a moratorium is that the borrower will pay back along with the interest accrued when his repayment capacity returns.