Srinagar: J&K High Court on Tuesday asked the Union Finance and Home ministries, the Reserve Bank of India (RBI) and J&K government to file its response 11th of next month in an interest waiver petition by a local enterpreneurs.
The court had on July 02 issued notices (returnable by today) to the Union Ministry of Finance, Union Home Ministry, RBI, J&K government and J&K Bank Ltd, on a public interest petition challenging charging of interest on loans during the moratorium period.
As the case came up for hearing today, the lawyers representing their respective clients pleaded their inability to file the response within the stipulated time and sought more time.
The division bench comprising Chief Justice Gita Mittal and Justice Sanjay Dhar obliged the pleaders and directed the respondents to file their response by 11th of August.
The PIL, filed by a local businessman Sheikh Feroz Ahmad prayed for directions to the authorities concerned that no interest be charged on loans put under moratorium because of the losses suffered by businesses due to the ongoing pandemic.
According to the petition, four moratoria were announced by the J&K government in 2014, 2016, 2019 and 2020, but all the financial institutions that have made advances to the business community have been charging interest on these loans.
The moratorium thereby is applicable to only non-payment of installments on the availed loans during the period, it said.
“The charging of interest by the financial institutions on loans as have come under the moratorium has defeated the very purpose of declaring moratorium on loans,” it said adding that it defeats the very purpose of announcing the moratorium.
“What relief does a borrower get when he has to pay interest on a loan where installments are put on hold because of the moratorium,” it asked?
It pleaded that the rehabilitation packages were also notified by the J&K Bank in 2016 vide circular No.62-528 dated 15th December, 2016 and that of circular No. 40-619 dated 3rd of January, 2020.
“Although the decision, on the part of the respondents, to grant moratorium is appreciable, but by providing that the interest component shall continue to accrue on the outstanding portion of the term loans during the moratorium period, the very purpose of the scheme/policy has been rendered useless,” the petitioner said.
