Srinagar, July 2 (IANS) The Jammu and Kashmir and Ladakh High Court on Thursday issued notices to the Union Finance Ministry, the Union Home Ministry, the J&K government, the Reserve Bank of India and the J&K Bank Ltd, the lead bank in the UT, on a PIL challenging charging of interest on loans during the moratorium period.
The notice is returnable within two weeks.
The PIL, filed by prominent local businessman Sheikh Feroz Ahmad, before a division bench of Justice Ali Mohammad Magrey and Justice Rajnesh Oswal has prayed for directions to the authorities concerned so that no interest is charged on loans those have been put under moratorium because of the losses suffered by businesses due to the ongoing pandemic.
Interestingly, the PIL has revealed that so far 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 and thereby the moratorium is applicable to only non-payment of instalments during the period.
“The charging of interest by the financial institutions on loans…. those have come under the moratorium has defeated the very purpose of declaring moratorium on loans.
“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 instalments are put on hold because of the moratorium?
“Instead of helping the business community, the interest applied during one quarter becomes principle for the next quarter, thereby attracting interest on interest,” Feroz Ahmed told IANS.