New Delhi, June 13 (KNN) The Supreme Court has asked the Centre to clarify its position on the waiver of interest during the moratorium on loan and other repayments to banks.

The Reserve Bank of India (RBI) had introduced moratoriums on loans for three months on various EMIs which was later extended to six. However, it was argued that interest can’t be waived.

“Our concern is only whether interest that has been deferred… will be added to charges payable later and whether interest will be charged on the interest,” said Justice Sanjay Kishan Kaul, leading a three-member bench.

The government said it would hold a meeting of stakeholders this weekend including the RBI, banks and the finance ministry to arrive at a response and submit this to the court by June 17.

Petitioner Gajendra Sharma had argued that interest would otherwise continue to accumulate during the moratorium period and the borrower would have to pay that.

The RBI had told the court that “the benefit and intention of moratorium is not to waive any payment obligation to the borrowers”.

The central bank had said that the “benefit was to provide for a brief interlude in payment pressures”. It had also said that waiving interest would affect the financial stability of the banking sector.

The loan moratorium was not a “waiver” but a “deferral” and interest on it cannot be waived as it was a substantial sum amounting to Rs 2 lakh crore or 1% of GDP. Since customer profiles differ, the manner of recovery of interest had been left to the discretion of the lending institution, it had said.

State Bank of India had moved the court after the case was filed, seeking to be heard in the case.

The top court observed at the last hearing on June 4 that these were not “normal times” and that charging interest on a loan moratorium was “detrimental” and had sought the government stand on this.