Satya prakash
Tribune News Service
New Delhi, September 1
Amid uncertainty about the loan default plan that ended Aug. 31, the Center and the RBI told the Supreme Court on Tuesday that it could be extended for two years in light of the COVID-19 pandemic.
However, Attorney General Tushar Mehta told a three-judge bench led by Judge Ashok Bhushan that a formal decision had not yet been made.
On behalf of the Center and RBI, Mehta said a new affidavit has been filed in the superior court on the matter. “We are in the process of identifying the sectors in difficulty to vary the benefits according to the impact of the blow they have received,” he said.
“Please get the Center, the RBI and the Bankers Association together,” Mehta said.
Noting that the economy has contracted by 23 percent due to COVID19, he said that various measures have been taken for stressed sectors.
The higher court, which handles petitions calling for the waiver of interest, or waiver of interest on EMIs suspended during the moratorium, had previously commented that it made no sense to charge interest on interest.
Maintaining that the matter cannot be delayed any longer, the Bank released it for an additional hearing on Wednesday.
“Mr. Mehta, this bench is not scheduled to sit tomorrow. We will sit down tomorrow just to hear this case,” the court said.
Announced by the RBI in March for three months, the loan moratorium is a legal authorization for debtors to postpone paying EMIs. It was extended to six months until August 31, 2020.
The RBI and the Center argued that a complete exemption from interest was not possible as banks also had to pay interest to depositors.
Noting that not everything can be left in the hands of the banks, the Supreme Court on June 17 asked the Government to consider the possibility of interfering in the issue of the interest exemption for the loan moratorium announced in view of the COVID blockade -19.
“The central government cannot raise its hand in helplessness … After announcing the moratorium, now it cannot say that it is between banks and clients. If it announced the moratorium, it must ensure that the benefits are given to the clients on purpose. “said the Bank. said.
In response to a PIL filed by Gajendra Sharma, the RBI had told the court that the enforced waiver of interest on term loans would jeopardize the financial health and stability of the banks and also harm the interests of debtors.
However, The Bench had said that many clients did not benefit from the moratorium because they knew they were not getting any benefits.
“Our limited concern is to ease the burden on borrowers during these difficult times,” he said, adding that you cannot leave everything to the banks.
“It is an irony that billions of rupees have been defaulted on NPA accounts, but you have to charge interest here. We are aware of the problems if no interest is charged, but a pandemic is not a normal situation,” he had said. Bank.
The high court had asked the Center and the RBI to review the situation and clarify whether banks can come up with new guidelines for specific sectors such as agriculture, auto, commercial and housing loans in this regard.
He had tried to find out whether banks can waive interest on outstanding loans or whether the Center could share the burden.
Previously, the high court had asked the RBI to examine whether the benefits of its political decisions were being passed on to borrowers.
