The Supreme Court will today hear various petitions urging banks to stop the recovery of interest on interest from borrowers. Earlier, the hearing on the case was to be held on November 5, which was deferred till November 18. In the wake of the Kovid-19 pandemic, the Reserve Bank had provided a facility to stop payment of loan installments. Banks have charged interest on monthly installments of loans (EMIs) from customers availing this facility, which has been challenged in the apex court.
The Reserve Bank of India and the Ministry of Finance have already submitted separate affidavits to the Supreme Court stating that banks, financial institutions and non-banking financial institutions (NBFCs) have an amount equal to the difference of compounding and simple interest in the accounts of eligible borrowers till November 5. Will put Banks have put this difference in the account of the customers and information has also been given to the customers through SMS.
In the wake of the Kovid-19 pandemic, the Reserve Bank provided a moratorium on the payment of loan installments from March 1 to August 31. Many petitions have been filed by the banks availing the facility on the EMI interest charged by the customers. The Finance Ministry and the RBI had also stated that the difference between compound interest and simple interest on loans up to 2 crore would be returned to the borrowers’ accounts by November 5.
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