New Delhi, October 10
Holding that the mere continuation of the temporary loan moratorium would not benefit borrowers, the RBI has told the Supreme Court that a moratorium of more than six months could vitiate overall credit discipline and have a “debilitating impact” on the loan creation process. of credit.
Announced by the RBI in March for three months, the loan moratorium is a legal authorization for debtors to postpone the payment of EMI. It was extended to six months until August 31. The government said that more than 50 percent of borrowers did not take advantage of the moratorium. The higher court is hearing a slew of allegations, including the one that has requested instructions to declare the part of a notice from RBI, issued on March 27, “ultra vires to the extent that it charges interest on the loan amount during the period. of moratorium “. .
In its affidavit, the RBI said that any waiver of interest on interest would entail “significant economic costs” that banks cannot absorb without seriously affecting their finances, and this, in turn, would have huge implications for depositors and the financial sector. in general. stability.
It also asked the higher court to annul “with immediate effect” its provisional order of September 4 that prohibits banks from classifying accounts in NPA. – TNS
