New Delhi/Aug,10 : The Supreme Court on Thursday allowed the government two more weeks “to come up with something concrete for various sectors” in the loan moratorium matter. “What is going to happen in two weeks?… We are giving time to the centre, but take a concrete decision,” a three-judge bench of the top court told the government. This is the last chance for the centre and the RBI to come up with a plan to address the issues, the Supreme Court said, refusing to adjourn the case any further. The Supreme Court was hearing a batch of petitions seeking a waiver of interest on deferred EMIs during the moratorium period, which was introduced by the Reserve Bank of India (RBI) to ease the burden on existing borrowers in wake of coronavirus pandemic-related restrictions.
The centre told the top court that considerations are taking place at the highest level. The government is in consultation with banks and other stakeholders for relief, and two-three rounds of meeting have taken place and the concerns are being examined, it told a three-judge Supreme Court bench.
The extension of welfare to borrowers will be done on the basis of data, said the top court, which would take up the case for hearing in the last week of September. The earlier order on standard accounts of borrowers opting for the moratorium not to be declared as non-performing loans will continue, said the bench – comprising Justices Ashok Bhushan, R Subhash Reddy and MR Shah – through video conference.
In some relief to stressed borrowers, the Supreme Court had ruled last week that loan accounts of borrowers availing the moratorium – or a delay in loan repayments – will not be declared as bad loans till further order. The borrowers need to be protected and banks should not take any coercive against them, the top court had held.
A number of associations representing sectors such as banks and real estate developers are part of the hearings. While the petitioners demand a waiver of interest on interest (interest for exercising the option to suspend EMIs due to COVID-19), the government and the RBI are of the view that writing off interest will weaken banks and affect economic conditions. The centre and the RBI say that a waiver of interest on deferred EMIs would be against “the basic canons of finance” and unfair to those who repaid loans as per schedule. The top court has been told that the loan moratorium can be extended by up to two years on account of the coronavirus-related situation. The central bank had in March granted a three-month loan moratorium due to the pandemic-induced situation, and extended it till August 31 in May.