RBI Must Monitor Implementation Of Loan Moratorium Circular; Borrower Entitled To Seek Moratorium As A Matter Of Right For Continuity Of Business : Karnataka HC

The High Court of Karnataka has held that a borrower is entitled to seek loan moratorium on the basis of the Reserve Bank of India’s March 27 circular, on the ground that the non-grant of it would affect the continuity of business. While acknowledging that the grant of moratorium as per the RBI circular is the discretion of the bank, the Court stated that it is “mandatory” for the banks to ensure that continuity of business is not affected due to the non-grant of moratorium. The Court added that borrowers can seek the moratorium as a matter of right if they could establish that the growth and continuity of their business would be affected.