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ARTICLE · 12 APRIL 2021

The Loan Moratorium Judgment: Key Takeaways

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The Supreme Court (SC) vide Judgment dated March 23, 2021, in the matter of Small-Scale Industrial Manufactures Association (Regd.) v. Union of India & Ors...

IndiaInsolvency/Bankruptcy/Re-Structuring
Abhirup Dasgupta
Abhirup Dasgupta
Ishaan Duggal
Ishaan Duggal
Bhawana Sharma
Bhawana Sharma
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The Supreme Court (SC) vide Judgment dated March 23, 2021, in the matter of Small-Scale Industrial Manufactures Association (Regd.) v. Union of India & Ors1 (The Loan Moratorium Case), offered a solution to all the stakeholders in the ongoing scuffle between the Lenders and the Borrowers pertaining to charging of interest on loans during the moratorium period provided by the Reserve Bank of India (RBI) on payment of installments. The Court decided to not interfere with the economic prudence of the Central Government and the RBI on the loan moratorium policy and ruled against the reliefs sought by the Petitioners to extend the monthly loan moratorium offered by the RBI. However, in the interest of justice and to provide relief to the borrowers, the SC also decided that there shall not be any charge of interest on interest/compound interest/penal interest on interest for the period during moratorium.

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