Implement interest on interest waiver scheme at the earliest: SC to govt2 min read . Updated: 14 Oct 2020, 04:41 PM IST
- Adjourning the case to 2 November, the court said it expects the implementation of the government's decision on interest waiver by then
NEW DELHI: The Supreme Court on Wednesday pulled up the government for seeking a month’s time to waive interest on interest compounded on loans during the moratorium period, asking the Centre to implement its decision to waive the interest at the earliest.
Adjourning the case to 2 November, the court said, “We will expect the implementation of government's decision on interest waiver by then. We will review the implementation of the waiver."
The Centre in its affidavit, dated 2 October, had submitted its decision to bear the cost of the ‘interest on interest’ for MSME loans and personal loans up to ₹2 crores.
During Wednesday’s hearing, solicitor general Tushar Mehta, representing the Centre, submitted that the government’s decision would come into effect before 15 November.
The apex court bench, headed by Justice Ashok Bhushan, told the Centre to swiftly implement its decisions to waive compound interest. “Why one-month time to implement such a small decision... Benefits of government’s concessions to borrowers up to Rs. 2crore must be implemented as soon as possible," he added, “It’s not fair on the Centre's part to take a month to implement decision. See the plight of common people, when you've already decided to help."
Petitioners for individual borrower apprised the apex court that the banks have been levying interest on interest and prayed for directions for it to be stopped.
The apex court bench comprising Justices R Subhash Reddy and MR Shah observed that since the government has already exempted small borrowers from paying the compound interest, it should not be debited from their accounts. Such an action is not in the interest of common people, especially when a decision on it has already been taken.
It added that the the government’s decision was welcome but it needed to show concrete results. No orders/circular to the banks have been issued by the government or Reserve Bank of India.
Senior advocate Harish Salve, representing the banks' association, said banks await the RBI circular. However, he assured the top court that that the the government’s decision would be implemented and in interim if any wrongful debt occurs it shall be reversed by the banks.
Mehta also submitted before the bench that he had given 15 November as an outer limit. He assured the court that the government will try to implement the scheme before that date. “Government has taken upon itself a huge burden, will not cause delays," said Mehta.
While adjourning the case, the court said, “Common man’s Diwali is now in the hands of the government."
The central bank had on 22 May extended moratorium on term loans till 31 August amid the nationwide lockdown due to covid-19. In March, the central bank had allowed a three-month moratorium from paying EMIs and other loans on payment of all term loans due between 1 March and 31 May.
Petitioner Gajendra Sharma submitted in his petition that the interest would continue to accrue during the moratorium, which ultimately the borrower would have to pay. The petitioner argued that no interest should be charged during the moratorium because people are facing “extreme hardship". The petition also stated that paying additional interest on top of regular EMIs would be difficult.