National

Loan moratorium capable of being extended by 2 years: Centre, RBI tell SC

NEW DELHI, SEP 1 (AGENCIES) | Publish Date: 9/1/2020 1:26:08 PM IST

Amid uncertainty over loan repayment moratorium scheme that ended on August 31, the Centre and RBI told the Supreme Court on Tuesday that it was capable of being extended by two years in view of COVID-19 pandemic.

However, Solicitor General Tushar Mehta told a three-judge Bench led by Justice Ashok Bhushan that a formal decision was yet to be taken. On behalf of the Centre and RBI, Mehta said that a fresh affidavit has been filed in the top court on the issue. “We are in the process of identifying the distressed sectors to vary benefits as per the impact of hit they have taken,” he said. “Please let the Centre, RBI and Bankers Association put their heads together,” Mehta said.  Noting that the economy has contracted by 23 per cent due to COVID19, he said several steps had been taken for stressed sectors.
The top court -- which is seized of petitions demanding waiver of interest, or waiver of interest on interest on the suspended EMIs during moratorium -- had earlier commented that there was no point in charging interest on interest. 
Maintaining that the matter can’t delay any further, the Bench posted it for further hearing on Wednesday.  “Mr. Mehta, this Bench is not scheduled to sit tomorrow. We will sit tomorrow only to hear this case,” the court said.
Announced by RBI in March for three months, the loan moratorium is a legal authorization to debtors to postpone payment of EMIs. it was extended to six months till August 31, 2020.  The RBI and Centre maintained that a complete interest waiver was not possible as banks too had to pay interest to depositors.
 
Noting that everything can’t be left to banks, the Supreme Court had on June 17 asked the Government to consider interfering on the issue of interest waiver for the loan moratorium announced in view of COVID-19 lockdown. 
“Central Government can’t raise its hands in helplessness... After announcing moratorium, it can’t now say it’s between banks and customers. If you announced moratorium, you must ensure the benefits are given to customers purposefully,” the Bench had said.
Responding to a PIL filed by Gajendra Sharma, RBI had told the court that forced waiver of interest on term loans would jeopardise the financial health and stability of banks and would also harm debtors’ interests.
The Bench, however, had said many customers didn’t avail of moratorium as they knew they weren’t getting any benefits. 
“Our limited concern is to ease the burden on borrowers during these trying times,” it had said, adding everything can’t be left to banks.
“It’s an irony that thousands of crores have been defaulted on NPA accounts but you have to charge interest here. We are aware of the problems if interest is not charged, but a pandemic is not a normal situation,” the Bench had said.
The top court had asked the Centre and RBI to review the situation and clarity if banks can come up new guidelines for specific sectors such as agriculture, auto, business and home loans in this regard.
It had sought to know if banks can forgo interest on the outstanding loans or if the Centre could share the burden.
Earlier, the top court had asked the RBI to examine if benefits of its policy decisions were being passed on to borrowers.

Launched on December 3,1990. Nagaland Post is the first and highest circulated newspaper of Nagaland state. Nagaland Post is also the first newspaper in Nagaland to be published in multi-colour.

Desk:+91-3862-248 489, e-mail: npdesk@gmail.com Fax: +91-3862-248 500
Advt.:+91-3862-248 267, e-mail:npostadvt@gmail.com

QUICK LINKS

SUNDAY POST

Join us on

© Nagaland Post 2018. All Rights are Reserved
Designed by : 4C Plus