Context: The Supreme Court directed banks and financial institutions to refund compound interest, interest on interest or penal interest collected on EMI for loans during the period of moratorium from March 1 to August 31 last year.

Details:

• It is directed that there shall not be any charge of interest on interest/compound interest/penal interest for the period during the moratorium.
• The amount accumulated as compound/penal interest or interest on interest during the six-month moratorium on term loan EMIs should be given as credit/adjusted in the next instalment of the loan account.
• When the payment of instalments had already been deferred during the moratorium, what was the need to burden borrowers, already reeling under the financial loss of a pandemic and lockdown.
• The judgment also spelt relief for banks and lenders with the court lifting its nearly six-month bar on them from declaring accounts of borrowers as non-performing assets (NPAs).

https://www.thehindu.com/todays-paper/refund-penal-interest-on-emis-sc-directs-lenders/article34145951.ece

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