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Home / Industry / Banking /  Loan moratorium, interest payment: 10 things about Centre's looming 1 Oct deadline

New Delhi: The Centre told the Supreme Court on Monday that a decision is likely by 1 October over charging of interest by banks on instalments which were deferred during the moratorium period in view of the COVID-19 pandemic.

Here are the ten things that need to be known about the looming deadline for Centre and how things came to such a pass.

1) The top court asked the Centre to bring the decision on record and circulate the affidavit to the parties in a batch of pleas challenging interest on deferred instalments. The Centre informed the top court that the matter has received very serious consideration and the decision making process is atan advanced stage. A bench headed by Justice Ashok Bhushan said that it would hear the batch of pleas filed by various industries, trade associations and individuals on 5 October. The PILs are seeking an extension of the moratorium period and waive off interest on the repayment of the loan amount in view the COVID-19 pandemic.

2) The government, however, has to file the affidavit by 1 October to spell out its stand, ordered the three-judge bench comprising of justices Ashok Bhushan, R Subhash Reddy and M.R. Shah.

3) Tushar Mehta, Solicitor General, appearing for the Centre, said the government is looking into several economic issues.

The bench asked Mehta if he will be able to circulate his affidavit in advance to the parties concerned to which he agreed.

“We will fix the matter for Monday (October 5). Whatever is your policy, whatever you have, you circulate it. We will take it up on Monday. We don't want any further adjournment," the bench said.

4) The bench said that Mehta shall endeavour to circulate the affidavit among the parties by Thursday so that the matter is heard on October 5.

“The decision taken by the government should be brought on record along with an affidavit," the bench said.

5) Senior advocate Rajiv Dutta, appearing for the main petitioner Gajendra Sharma, said this is a very important matter and banks are acting as if it is a very normal issue.

Mehta requested him to wait for 2-3 days so that the government can take a final call. “I assure you that it is under consideration and it is at a very advanced stage".

Advocate Vishal Tiwari, a petitioner in the matter, submitted that individual borrowers are facing trouble and a lot of hardships from the lending institutions as they are making threatening calls to them.

6) On September 10, the top court had extended its interim order that no account is to be declared a non performing asset (NPA) or bad loan till further orders after the Centre said an expert panel has been set up to look into the issue of interest being charged by banks on instalments deferred during the moratorium period due to COVID-19 pandemic.

The top court had directed that decisions taken by the Centre, the RBI and different banks be placed on record for consideration.

7) The Centre had sought two weeks’ time to file an appropriate affidavit bringing on record the relevant decisions and directions of the government as well as the Reserve Bank of India (RBI).

It had said that everything has to be considered holistically and the government is considering all the sectors, for which an expert panel has been constituted.

The top court had asked the Centre that concrete decisions should be taken with clarity.

8) On September 3, in a relief to stressed borrowers who are facing hardship due to the impact of pandemic, the top court had said that accounts which were not declared as non-performing assets till August 31 this year, shall not be declared NPA till further orders.

The pleas in the apex court have raised issues pertaining to validity of RBI’s March 27 circular which allowed lending institutions to grant moratorium on payment of instalments of term loans falling due between March 1, 2020 and May 31 this year due to the pandemic. Later, the period of moratorium was extended till August 31.

9) The Centre had recently told the court that waiver of interest on deferred EMIs during moratorium period would be against “the basic canons of finance" and unfair to those who repaid loans as per schedule.

RBI has however come out with a scheme which provides for extension of moratorium for two years to certain stressed borrowers, the Centre had informed the top court.

10) The government has constituted an expert committee under former CAG Rajiv Mehrishi to look into the much-debated issue of waiver of interest on loans during the moratorium period.

With PTI inputs

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