Loan moratorium issue: Supreme Court gives RBI, Centre, banks one week to file replies

New Delhi (ILNS): The Supreme Court today gave the RBI, the Centre and the banks a week’s time to file their replies and observations on the issue of loan moratorium and interest payment for sectors that have claimed they deserve repayment consideration because of the Covid-19 pandemic. The court will hear the issues again on October 13.

A bench of Justices Ashok Bhushan, R. Subhash Reddy & M. R. Shah was hearing the petition seeking waiver of accruing interest during the six-month loan moratorium period.

The Centre in its affidavit filed last week before the Supreme Court has agreed to waive off compounded interest for loans upto Rs 2 crore during the six-month loan moratorium period.

In its affidavit the government has said that relief on waiver of compound interest will be for MSME loans, education loans, housing loans, consumer durable loans, credit card loans, auto loans, personal loans, consumption loans, all up to Rs 2 crores.

Today, the counsel for CREDAI submitted before the court that there were a lot of facts and figures present in government affidavit which were without any basis. CREDAI disputes the Rs 6 lakh crore mentioned by the government in its affidavit and asked for a few days to reply to the Centre’s affidavit. In its submission the CREDAI also reminded the court that it has to pay full interest from September 1.

Senior Advocate Aryama Sundaram, arguing for CREDAI, said that there has been no relief package announced by the Centre for the real estate sector. There has neither been any loan restructuring proposal or plan given to this sector by the Centre, he said.

Solicitor General Tushar Mehta replied that sector-wise relief given in view of available resources.

At that the bench asked the Centre to give details on how banks would proceed with this plan.

Senior Advocate V Giri, arguing for the RBI, said that the decision had been taken at the highest level to handhold small borrowers. He said that the government was deliberating on aspects of relief to various sets of borrowers.

“We identified 8 sectors which were hit hard with interest levy,” said the counsel.

The SG said that the mechanism (proposed) has to be put in place by the banks.

The petitioners have sought an extension of loan moratorium period.

At that the counsel for the Banks Association presented its problem. He said that accounting has frozen after the Supreme Court “stopped us from classifying accounts as NPAs. We need few days to reply to government’s proposal.”

At that time the SG reminded the court that the RBI’s dialogue with the Centre and the stakeholders was subject matter of judicial review.

Justice Bhsuhan said that the affidavit doesn’t deal with several issues arising in the case.

“No consequential circular has been issued either by the RBI or any other authority. Whatever recommendations had been given by the Kamath committee has to be considered also. The report has also to be circulated to the needy persons.” 

The court observed that the petitioners from various sectors have sought time to reply.

Indian Banks Association, other banks have to reply to the Centre’s proposal too.

“So, we allow one week time,” said the court.

Read the order here;

-ILNS