NEW DELHI – A great relief to individuals and commercial borrowersthe Supreme Court asked Thursday banks do not declare any loan account as unproductive asset (NPA) until it approved new orders on a slew of petitions challenging charging interest on loans during the six-month payment freeze that ended on August 31.
When the Bankers Association of India offered a two-month moratorium on filing an unmanaged loan account as NPA, a bank of Justices Ashok Bhushan, RS Reddy and MR Shah approved this interim order prohibiting banks from declaring loans such as NPA to protect borrowers who have difficulty organizing funds for loan repayment.
“In light of the above, accounts that were not declared as NPA until August 31 will not be declared as NPA until new orders are issued,” the bank said. The SC will resume the hearing on the petitions on September 10.
Banks can declare an NPA loan if the borrower does not cover the principal or interest for 90 days. Once a loan is declared as NPA, banks can resort to repossession processes, including the sale of the mortgaged property.
Borrowers have argued that they earned virtually nothing from their businesses during the last six months of closing, yet they were laden with interest as well as accrued interest on deferred installments. They said that once the moratorium period is over, they will be charged with all deferred installments along with compound interest, making repayment difficult, and banks could declare their loans as NPAs.
As representatives of various sectors narrated their problems during the closing period, the Confederation of the Association of Real Estate Developers of India (Credai), through a senior advocate Kapil sibalHe said that the intent of both the Center and the RBI appeared to be solely to protect the interests of banks and credit institutions.
Sibal said that the economic downturn had seriously hampered activities in the real estate sector and the 1,400 members of Credai, as well as 270 ancillary industries that depend on real estate, were badly affected. The Center, the RBI and the IBA had not submitted any aid package for the real estate sector, he said and supported the demand of other petitioners for exemption from interest, as well as interest on the payment of loan installments during the moratorium period. .
Apply for the IBA, which has 247 member banks, including the SBI, lead counsel Harish Hail He promised the court that no loan account would be classified as NPA for the next two months, that is, until October 31, whether or not the default exceeded the 90-day deadline.
For the Center and the RBI, Attorney General Tushar Mehta said that the banking regulator, in consultation with experts, has decided that the residual tenure of the loans could be extended for up to two years, with or without including the six-month moratorium period. from March. August 1 to 31. Mehta narrated several financial packages announced by the Union government for different industrial sectors to help revive the economy. However, he said the interest exemption would have a crippling effect on the banking industry and impact interest on deposits in accounts of Rs 194 million.
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