India’s Supreme Court approved an interim order on Thursday saying that accounts not reported as non-performing assets (NPAs) as of August 31 will not be declared as NPA until further notice.
The high court on Thursday heard a series of petitions seeking a waiver of interest on the loan moratorium granted by the Reserve Bank of India (RBI). In the wake of the coronavirus pandemic, the central bank of India allowed lenders to grant a moratorium on loans for three months of EMI (monthly equivalent installments), which are due between March 1, 2020 and May 31, 2020 Later, the RBI rolled it out. for three more months until August 31. The goal was to help the common man facing job losses or pay cuts during a global pandemic.
The provisional order was approved by Justices Ashok Bhushan, led by Justices Ashok Bhushan, and which included R Subhash Reddy and MR Shah as they heard about the group of petitions calling for the exemption of interest or the exemption of interest on the interests of EMIs suspended during the moratorium period. The Supreme Court will continue hearing the case on September 10.
While discussing whether banks should charge interest on the moratorium period, Attorney General Tushar Mehta told the Supreme Court: “The idea of the moratorium was to defer payment to ease the burden caused by COVID and the lockdown for businesses to they can manage the working capital. The idea was not to waive the interest. The effort is that those who are affected by COVID and face distress get the benefit and those who are in default cannot benefit. “
“The committee of experts will develop specific guidelines for the sector on September 6,” Mehta told the high court. The panel of experts will decide on sectoral relief to alleviate stress caused by the pandemic, Mehta added. The NDMA (National Disaster Management Authority) is not required to intervene at this stage, added the Attorney General.
“The question is about compound interest lawsuits in the meantime. Moratorium and criminal interest cannot go hand in hand. RBI will have to clarify,” Judge Reddy said, according to legal news website Bar & Bench.
The Center and the RBI informed the Supreme Court on Tuesday that the moratorium period in the payment of loans amid the COVID-19 pandemic is “extendable” for two years.
“We are in the process of identifying the sectors in difficulty to vary the benefits according to the impact (COVID-19) of the blow they have received,” Mehta said.
Finance Minister Nirmala Sitharaman on Thursday called on bankers to implement loan resolution schemes by September 15. The distress related to COVID-19 should not affect your assessment of the creditworthiness of borrowers, Sitharaman added.
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