On Wednesday, the Supreme Court said that the government should implement “as soon as possible” the exemption of compound interest on loans of up to 2 million rupees under the RBI moratorium scheme, as the borrower cannot be expected to keep waiting. for a month, adding that the common man’s Diwali is in the hands of the government.
“The common man’s Diwali is in his hands,” the high court told the Center.
The Center had declared in an affidavit last Saturday that the government could take until November 15 to present a formal scheme announcing the exemption from compound interest.
Taking a strong objection to such tactics by the Center, the three-judge tribunal headed by Judge Ashok Bhushan said: “What you have decided should be filtered out to the beneficiaries. You announced an exemption on compound interest on October 2, but no order has been issued to the banks. Despite his decision, the common man is concerned that banks will charge him interest on interest. Why should it take you so long to figure out the modalities? It seems like you’re just delaying everything. “
Attorney General Tushar Mehta, who represented the Center, informed the court that the compound interest waiver has been issued on loans of up to Rs 2 million for eight categories of beneficiaries. These include loans granted to micro, small and medium enterprises (MSMEs), personal loans offered on account of housing, education, durable consumer goods, automobile, consumption, personal loans to professionals and credit card fees.
Mehta said: “When the Center has stated in the affidavit that the decision will be implemented, it will be done. The outer limit is November 15, but we plan to do it much earlier. We have made the decision seeing the plight of the common man. Anyway, we don’t benefit from delaying it further. “
The bench, which also includes judges RS Reddy and MR Shah, responded: “There is a difference between ‘will be implemented’ and ‘will be implemented’. Once you’ve made a decision, you need to implement it as soon as possible. We do not agree that it takes so long for such a small decision.
“The modalities to be followed by the credit institutions will be formulated in a scheme that will be part of an Office Memorandum (MO). Taking into account the complexities of the different categories of borrowers and their different terms and conditions, such a scheme will be issued through an Office Memorandum on or before November 15, “the Center said last week.
Lead counsel Harish Salve, appearing with the Indian Banking Association (IBA), a consortium of more than 200 banks, assured the court that any decision of the Center will be implemented.
“The numbers are large for the eight categories of beneficiaries who will benefit from the plan. Our problem is that we cannot do anything without a circular issued by the Reserve Bank of India (RBI), ”he said.
The court wondered why the modalities were not resolved before the Center made the announcement of the resignation in court.
“Credit institutions will be required to take the appropriate measures to implement the decision to exempt interest on interest [compounded interest] in the respective accounts of eligible borrowers within a month from the aforementioned OM, after which the credit institution will approach the Central Government for reimbursement, ”said the government.
The court sent the matter to November 2.
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