The lockdown enforced due to COVID-19 pandemic all across India had a massive impact on the economy. That led to huge financial burden especially on the salaried class who battled either job losses or massive salary cut. The Reserve Bank of India (RBI) on March 27 issued the circular which allowed lending institutions to grant a moratorium on payment of instalments of term loans falling due between March 1, 2020, and May 31, 2020, due to the pandemic. Pleas were raised pertaining to charging of interest on interest by banks on EMIs which have not been paid by borrowers after availing the loan moratorium scheme of RBI during March 1 to August 31. A Public Interest Litigation (PIL) was later filed in the Supreme Court (SC) seeking directions to declare the notification dated March 27, 2020 issued by Reserve Bank of India as ultra vires to the extent it charges interest on the loan amount during the moratorium period.

Source: dna December 30, 2020 15:11 UTC