Loan Moratorium: Implement Interest Relief ASAP, Says SC: The Tribune India
New Delhi, October 14
The Supreme Court said on Wednesday that the Center should implement “as soon as possible” an interest waiver on loans up to Rs 2 crore under the RBI’s moratorium program due to the COVID-pandemic. 19, claiming that ordinary man’s Diwali is in the hands of the government.
The Supreme Court asked the Center whether the benefit of the loan interest exemption for borrowers of up to Rs 2 crore during the moratorium period had “crept in” to the common man.
The court, which expressed concern over how the interest relief would be granted to borrowers, said the Center had made a “welcome decision” in taking note of the plight of the common man, but authorities did not ‘have issued no order in this regard.
“Something concrete needs to be done,” said a bench led by Judge Ashok Bhushan, adding: “The benefits of waivers to borrowers up to Rs 2 crore must be implemented as soon as possible.”
The highest court, which put the case to trial on November 2, told lawyers for the Center and the banks that “Diwali is in your hands.”
The Center recently told the Supreme Court that going beyond fiscal policy decisions already taken, such as waiving compound interest charged on loans up to Rs 2 crore during a six-month moratorium period, could be “detrimental” to the overall economic scenario. , the national economy and banks may not be able to withstand the “inevitable financial constraints”.
The highest court is hearing a batch of petitions that have raised questions about the six-month loan moratorium period announced due to the COVID-19 pandemic.
The bench, also including Judges RS Reddy and MR Shah, said when authorities have decided something, it must be implemented.
“The government has made a welcome decision in taking note of the plight of the common man. But you haven’t given any orders to anyone. You just gave us the affidavit, ”the bench told Solicitor General Tushar Mehta.
“We are now concerned about how the benefits of the waiver will be granted,” the judiciary said, adding, “We are only asking whether the waiver of interest on the loan has spread or not.”
During the hearing, which was conducted by video conference, Mehta told the judiciary that the Center had made an “informed decision” and had taken a “huge burden”.
“When the central government declares on an affidavit that it will be implemented, there should be no apprehension,” Mehta said. “There is diversity in loans and different terms must be followed. “
He said the banks would waive the interest on the interest and then be compensated by the government and the calculation would have different terms.
“We tell you that it is a welcome decision but they want concrete things,” observed the judiciary, adding: “We welcome the decision of the Center, only thing that it should be translated in a practical way.”
The judiciary said the Center could take steps to implement its decisions referred to in affidavits filed in court.
Senior lawyer Harish Salve, representing the banking association, told the judiciary that the banks will implement any decision made by the government.
Senior lawyer Rajeev Dutta, representing one of the petitioners, said the banks were capitalizing by taking interest on the interest on existing loans.
“We are small people with small loans (less than Rs 2 crore). They shouldn’t escalate interest in these cases, ”Dutta said.
At that, the bench said it had already ordered that banks cannot declare APM.
“We have already passed a decree prohibiting the classification of NPAs and without a tax policy the proposals cannot be changed,” he said, while asking the Center and the banking association when the benefits would be put. implemented.
“For these modalities, you need a month,” asked the bench.
Salve said: “The complexity is such that it takes time”.
However, the judiciary said the decisions taken by the authorities must be implemented now.
The highest court hears the motions, including the one that requested an instruction to declare the part of an RBI notification, issued on March 27, “ultra vires to the extent that it charges interest on the loan amount during the period. moratorium … ”
The Reserve Bank of India (RBI) recently filed an affidavit in the Supreme Court claiming that a moratorium on loans exceeding six months could have the effect of “vitiating global credit discipline” which would have an “impact” debilitating ”on the credit creation process. in the economy.
These affidavits were filed following the October 5 Supreme Court order asking them to record the recommendations of the KV Kamath Committee on Debt Restructuring Due to COVID-19 Stress on Various Sectors as well as Notifications and circulars issued so far on the moratorium on loans.
He also said that the Supreme Court’s interim order of September 4, restricting the classification of accounts as non-performing accounts based on instructions issued by the RBI, could be overturned with immediate effect.
Kamath’s panel made recommendations for 26 sectors that could be considered by lending institutions when finalizing loan resolution plans and said banks could take a graduated approach depending on the severity of the crisis. coronavirus pandemic in an area.
Initially, the RBI issued the circular on March 27 which authorized credit institutions to grant a moratorium on the payment of maturities of term loans maturing between March 1, 2020 and May 31, 2020, due to the pandemic.
Later, the moratorium period was extended until August 31 of this year. – PTI