The Supreme Court on Thursday made oral observations raising concerns over the Reserve Bank of India allowing levy of interest during the moratorium period allowed for loan repayments.
A bench comprising Justices Ashok Bhushan, S K Kaul and M R Shah was hearing petitions filed Gajendra Sharma and few others challenging the RBI Circulars of March 27 and May 22 to the extent they allowed financial institutions to levy interest on loans during the 6-month moratorium.
Justice Bhushan said "There are two issues in this: No interest during moratorium period, and no interest on interest".
Accrual of interest while allowing moratorium is "detrimental", remarked Justice M R Shah.
On this, the Solicitor General Tushar Mehta said that he will seek instructions from the Ministry of Finance and RBI.
Referring to the RBI's stand in the counter-affidavit that the waiver of interest would affect the financial health of lending institutions, Senior Advocate Rajiv Dutta, appearing for petitioners, submitted
"The cat is out of the bag. They're saying profitibality of bank is more important".
"So only the banks should earn and rest of the country goes down under?", the senior counsel asked.
The senior counsel referred to the observations of the SC in the Air India case that health of the people is more important than profits.
In response, Justice Ashok Bhushan said "We know, economic aspect should not be higher than health of people."
The bench then posted the matter to June 12, giving time to the petitioner to file rejoinder. The Court asked the Solicitor General to get instructions by then.
The bench also expressed displeasure at the media reporting the contents of the RBI's counter-affidavit before the case.
"RBI is filing affidavit in media first before coming to the Court ?!", asked Justice Bhushan, when the case was taken up.