In view of the crisis arising from the corona virus, the RBI had issued a circular to the banks, recommending a three-month exemption in EMI.
A petition filed in the Supreme Court on Saturday. In which, in the midst of the crisis arising out of the corona virus epidemic, it demanded to issue a directive to cancel the circular of the Reserve Bank of India for grant of three months to repay the outstanding loan installments.
The petition said that the circular of the Reserve Bank is a fraud because it will continue to charge interest on the loan amount during the period of three months. The petitioner argues that in such a situation, it does not make sense to charge additional interest on regular equal monthly installment (EMI).
RBI had issued a circular
The Reserve Bank issued a circular on 27 March advising banks to provide three months relief in payment of outstanding. Installments on March 1 to provide relief to the borrowers in view of the corona virus crisis. The Reserve Bank had said that banks and financial institutions can provide this rebate on the request of customers.
It states that the timetable for repaying all outstanding installments of such loans and the. Repayment period will b extended by three months according to the period of deferment. However, during these three months of relief, interest will b charged on the outstanding amount and it wilL accumulate. After the end of the relief period, the customers will also have to pay the interest of these three months.
Shocked the circular
Advocate Amit Sahni, in a petition filed in the Supreme Court, called this Reserve Bank circular a fraud. He said that during this relief period of three months, interest will continue to accumulate on the customers. In such a situation, paying additional interest of three months with regular installments is not a relief.
‘Interest should not b taken’
The petition demanded a direction to the Central. Government and the Reserve Bank that no interest should be charged from the customers for these three months of relief. The petition also demanded that the relief period deadline should b extended for those unemployed due to the coronavirus epidemic.
The petition said that the coronavirus has affected every aspect of society. Even after the removal of the applicable lockdown for its prevention, it will have serious consequences for a long time. It is the responsibility of the government and the Reserve Bank to help the citizens in such a situation.