The government will present its plan today to help borrowers ease their EMI burden during the coronavirus crisis, as the high court will hear final arguments in the loan moratorium case. Earlier this month, the Supreme Court had given the government two more weeks “to come up with something concrete” in the case involving an optional moratorium on loan repayments allowed by the RBI in light of COVID-related restrictions. 19. The high court is hearing a batch of petitions seeking a waiver of interest on deferred EMIs during the moratorium introduced by the RBI to offset the financial hit received by borrowers during the coronavirus-induced lockdown.
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In its order of September 10, the high court had given the government and the RBI the last chance to come up with a plan, refusing to postpone the case any longer.
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“What is going to happen in two weeks? … We are giving the center time, but make a concrete decision,” the judges had said while the government sought more time. That day, the Supreme Court issued an interim order prohibiting lenders from declaring accounts as delinquent assets, or bad loans, until further orders.
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The previous order on standard accounts for borrowers opting for the moratorium will continue, justices Ashok Bhushan, R Subhash Reddy and MR Shah said virtually. Borrowers must be protected and banks must not take any enforcement action against them, the high court had held.
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The high court had also ordered the government to include specific details, such as the compound interest to be charged and any impact on the credit rating from taking the moratorium, in its plan for borrowers, stating that the plan is due September 28. listening.
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The center has established a panel of experts, under former Comptroller and Auditor General (CAG) Rajiv Mehrishi, to analyze the issue of interest charged by banks on deferred fees during the moratorium period due to the COVID-19 pandemic. . The government has said that talks are taking place at the highest level with banks and other stakeholders, and any concerns are being examined.
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Interest on deferred IMEs is also known as “interest on interest” in the case, which is comprised of a number of associations representing sectors such as banks and property developers.
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Attorneys appearing to petitioners have expressed concern regarding individual loans, as well as other sectors, noting that people are most affected during the pandemic. They argue that banks are debiting both interest and interest on creditors’ accounts and that the credit rating is also being lowered, which may have an adverse effect on multiple account holders.
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While the petitioners have demanded a waiver of interest on interest (interest in exercising the option to suspend EMI due to COVID-19), the government and the RBI are of the opinion that canceling the interest will weaken banks and affect conditions economic.
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The center and the RBI say a waiver of interest on deferred EMIs would run counter to “basic finance royalties” and would be unfair to those who repaid loans on schedule.
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In March, the RBI issued a circular allowing banks and other financial institutions to grant a moratorium on the payment of installments on loans that are due between March 1, 2020 and May 31, to ease financial pressure on borrowers. borrowers. That period was subsequently extended until August 31.
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