NEW DELHI: The Supreme Court said Wednesday that it was a “welcome move” by the Center to waive compound interest on loan installments of up to Rs 2 million payable during the six-month moratorium period from March 1 to March 31. August, but disapproved of the time of more than a month that tried to implement the decision.
A bank of Judges Ashok Bhushan, RS Reddy and MR Shah called on the government to speed up the implementation process and said: “We welcome the Center’s decision taken in the interest of the common man. We want it to be implemented quickly. “Before the day’s arguments were closed, Judge Shah said in a lighter tone:” Your (people’s) Diwali is in your hands. ”
In its affidavit of October 2, the government had informed the court about the exemption of interest on the interest of the installments during the moratorium period for loans of up to 2 million rupees from which MSMEs and small borrowers benefit. He had said that, taking into account the different terms and interest rates for different types of loans in this category, the necessary mechanisms for the implementation of the decision would be notified “on or before November 15.”
The bank repeatedly questioned the Center on Wednesday about why it needed a one-month window to implement the measure when it could be enforced simply by issuing a directive to banks. “You just have to instruct the banks to implement the decision. Look at the plight of ordinary people. They have welcomed the decision. But they want formal orders for the concrete implementation of the decision. It is such a small decision. It requires. more than a month to implement? “he asked.
However, Attorney General Tushar Mehta, while emphasizing that the Center had decided to forego compound interests while keeping in mind the plight of ordinary people, suggested that the task was much more complex. “When the Center says in an affidavit that it will be made, there should be no doubt about the implementation of the decision in letter and spirit. This places a huge financial burden on the government, as it has to reimburse the banks for the compound interest waived. Individual borrowers who did not take advantage of the moratorium would have to be repaid. But the loans are of different types. Credit card loans, consumer durable purchase loans, bank loans for various purposes have variable interest rates and require complex calculations, “he said.
“We are obligated to implement the decision and we will not benefit by delaying implementation. The notification will arrive on or before November 15, ”he said. The court sought information on progress in implementing the decision before November 2, the next hearing date.
Popping up by the Banking Association of India, lead defender Harish Salve told the court that once the government has made a political decision, it will be implemented. “But the number of recipients in the Rs 2 million loan category is very large. We (the banks) cannot act on the policy decision without the Reserve Bank of India issuing a circular / notification and providing the mechanism for the implementation of the policy decision, ”he said.
In its Oct. 2 affidavit, the Center had said that the compound interest waiver waiver would be available to all small borrowers, regardless of whether they had made use of the repayment moratorium during the six-month period. This means that those who continued to pay installments during the default period will also benefit in the same way from the compound interest exemption decision that will now be available to those who did not pay loan servicing fees during the six-month period. .
“This category of borrowers, in which case compound interest will not apply, would be MSME loans and personal loans up to Rs 2 million from the following categories: MSME loans, education loans, home loans, consumer durable loans, installments on credit cards, auto loans, personal loans to professionals and consumer loans ”, the ministry of finance had said.
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