The Supreme Court said today that the center’s affidavit on the exemption of “interest on interest” on loans of up to 2 million rupees, frozen during a six-month moratorium granted due to the coronavirus crisis, was unsatisfactory and requested a new version in a week. The affidavit “does not address various issues raised by the petitioners,” the court said. The central government has been asked to consider the concerns of real estate and energy producers. The Supreme Court also noted that the government or the RBI did not issue “consequential orders or circulars” to enforce the center’s decisions.
The case was postponed until October 13, as real estate developers have sought a few days to respond to the government’s plan to forgo compound interest on loan repayments.
On Friday, the center had told the superior court in its affidavit that it would waive the compound interest component for small businesses and some other education and housing-related loans, and credit card fees, to help the borrowers.
“Many facts and figures in the government’s affidavit are baseless,” attorney for the real estate industry body CREDAI, Kapil Sibal, told the high court, seeking a few days to respond to the government’s affidavit explaining his stance. .
Senior counsel Aryama Sundaram, who appeared for the real estate developers, told the Supreme Court that the Finance Ministry’s estimate that waiving interest on loans of all categories would cost banks 6 lakh crore rupees. The CREDAI or Confederation of Real Estate Developers Associations of India, the main association of private real estate developers in the country, is among several representations from different sectors involved in the case.
According to the government’s filing, presented to the high court on Friday, the interest exemption will apply to loans taken by micro, small and medium-sized enterprises (MSMEs) for education, housing, consumer goods and auto loans, and for credit card fees.
For the categories specified by the government, the interest exemption will be independent of whether the borrower has taken advantage of the moratorium.
The government’s decision on Friday, based on the recommendation of a government panel headed by former comptroller and auditor general Rajiv Mehrishi, marks a departure from its earlier decision to say no to any interest waiver, as it would affect banks. .
A group of petitioners in the case had requested a waiver of interest on deferred EMI, or interest on interest, during the six-month moratorium period granted by the Reserve Bank of India because of the coronavirus pandemic.
The RBI had given borrowers the option to delay their EMIs for six months, until August 31, as restrictions related to the coronavirus pandemic pushed the economy into a record 23.9% drop.
The center and the RBI have already told the high court that the moratorium can be extended for up to two years.
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