In March, the RBI had granted a 3-month moratorium on coronavirus loans (Representational)
New Delhi:
The Center should receive a call by Oct. 1 about how much time it will give borrowers who have been unable to repay loans due to the coronavirus pandemic. It also has to decide whether they have to pay interest for this period, the Supreme Court said today. He received a week from the Supreme Court today, at the end of which he has to detail the way forward in an extension of the moratorium, waiver of interest, sectoral relief and his decision on the recommendations of the Mehrishi Committee, which was asked to evaluate the impact of the interest exemption during the moratorium linked to Covid.
Here are the 10 points on the term of the loan default:
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Today, at the end of a two-week extension, the Center asked for more time, saying that the decision on this “is in an advanced stage.” The court has given you another week; the next hearing will be on October 5.
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The government, however, has to submit an affidavit before October 1 to explain its position, ordered the three-judge bench of Justices Ashok Bhushan, R Subhash Reddy and MR Shah.
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In March, the Reserve Bank of India had granted a three-month moratorium on loans due to the covid pandemic. It was later extended until August 31.
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But in early September, the Supreme Court, in response to the requests, asked the government to chart a course to help borrowers who have not been able to make payments. The petitions had requested exemption from interest during the six-month moratorium period.
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“We are giving the Center time, but let us make a concrete decision,” the judges had said at a hearing on September 10, making it clear that the government needs to chart its own course and not “hide behind the Reserve Bank.”
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The court had also said that the loan accounts of borrowers who choose to defer loan repayment will not be reported as bad loans until new orders are issued.
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The Center and the Reserve Bank of India have told the court that the loan moratorium may be extended up to two years due to the situation related to the coronavirus. But there is still no clarity on the situation related to interests.
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The Center had previously told the court that waiving interest on deferred EMIs during the moratorium period would be contrary to “basic finance royalties” and would be unfair to those who repaid the loans on schedule. However, the Reserve Bank has presented a plan that provides for the extension of the moratorium for two years to borrowers facing financial constraints.
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In September, the government set up a panel to analyze the question of interest charged by banks on deferred fees. The three-member committee, under former Comptroller and Auditor General Rajiv Mehrishi, will make an overall assessment to help the government make informed decisions.
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The Mehrishi Committee was to measure the impact of coronavirus-related restrictions on the economy and the prospect of waiving interest. He was also asked to submit suggestions to help various sectors of society and to present his report in one week.
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