Loan moratorium: Centre asks SC to close case

Tribune News Service

New Delhi, November 19

Having waived off compound interest on loans up to Rs 2 crore, the Centre on Thursday told the Supreme Court that no further judicial intervention was needed as sufficient relief has already been given to distressed borrowers.

During hearing on PILs seeking relief for borrowers adversely affected by COVID19 lockdown, Solicitor General Tushar Mehta told a Bench headed by Justice Ashok Bhushan that issues relating to loan moratorium was a fiscal policy matter and the government has taken several proactive steps for various sectors.

Highlighting the measures taken by the Finance Ministry and RBI, Mehta said it was not a case of “no action” and no further indulgence should be given.

The Bench disposes of petitions wherein petitioners’ were satisfied with compound interest waiver and posted rest of the petitions for hearing next week, even as Mehta said to ask for sector specific reliefs from the court was not a remedy available under Article 32 of the Constitution.

Announced by RBI in March for three months, the loan moratorium is a legal authorisation to debtors to postpone payment of EMIs. It was extended to six months till August 31, 2020. The government said more than 50 per cent of the borrowers didn’t avail of the moratorium.

The RBI and the Finance Ministry had told the court that the banks, financial and non-banking financial institutions have credited into the accounts of eligible borrowers by November 5 the difference between compound and simple interest collected on loans of up to Rs 2 crore during the moratorium scheme period.

Earlier, RBI had requested the Supreme Court to vacate its September 4 interim order restraining banks from classifying accounts into non-performing accounts even as the hearing was deferred to November 18.

“We are facing difficulty due to order banning declaring of NPAs,” senior advocate V Giri, representing RBI, had told the Bench.

In an affidavit filed in the top court, the RBI had said, “If the stay is not lifted immediately, it shall have huge implications for the banking system, apart from undermining the regulatory mandate of the Reserve Bank of India.”

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