The Supreme Court is today hearing petitions seeking interest waiver during the loan moratorium period.
The bench comprising of Justices Ashok Bhushan, R Subhash Reddy and MR Shah has resumed hearing and will most likely conclude the hearing today.
Senior lawyer Ravindra Srivastava, representing an industry group, to SC:
> Disaster Management Act (DMA) can override contracts in critical situation. Duty of government to protect those who can’t protect themselves. The government can’t deny relief on basis of financial stress. (Inputs from Bar & Bench)
Any classification to be rationale or have an intelligible differentia needs to be based on a study. The DM Act can be used to collect this data rather than the finance ministry saying Rs 2 crore is the limit.
More needs to be done by the Reserve Bank of India (RBI). Government’s decisions cannot ignore its economic capacity. Classification between class of borrowers should be just, many got relief. The class of big borrowers is not defined.
> To leave it to the banks to establish their own criteria is the problem and this criteria will create subjectivity from bank to bank and the methodology will differ. (Input from LiveLaw)
Here’s what happened previously:
> The Reserve Bank of India (RBI) had in March announced a moratorium on repayment of term deposits for three months, which was later extended till August 31. The move was intended to provide borrowers relief during the COVID-19 pandemic.
> The SC had on September 3 instructed banks not to declare accounts as non-performing assets (NPAs) until further orders.
> The Centre in October said that it would waive compound interest on the repayment of loans of up to Rs 2 crore in some categories, a move that would provide relief to individual and MSME borrowers.
> The top court had on November 19 directed Centre and RBI to reply to suggestions put forth before the bench. The SC also disposed off petitions in which the petitioners are satisfied with compound interest waiver.
> The SC has previously said there is “no merit in charging interest on interest”.
> The RBI had on June 4 said lenders will lose Rs 2 lakh crore if interest is waived completely during the moratorium period.