2 min read.Updated: 03 Sep 2020, 04:45 PM IST Written By Anulekha Ray
The apex court heard a batch of petitions seeking interest waiver on loan moratorium granted by Reserve Bank of India
The Supreme Court will continue the hearing of the case on 10 September
The Supreme Court of India on Thursday passed an interim order saying that the accounts not declared as non-performing asset (NPA) as on 31 August shall not be declared as NPAs till further notice.
The apex court on Thursday heard a batch of petitions seeking interest waiver on loan moratorium granted by Reserve Bank of India (RBI). In the wake of coronavirus pandemic, the central bank of India allowed the lenders to grant a loan moratorium for for three months of EMI (Equated Monthly Instalments), falling due between 1 st March 2020 and 31 st May 2020. Later, RBI extended it for further three month till 31 st August. The aim was to help the common man who faced loss of jobs or pay cut during a global pandemic.
The interim order was passed by the headed by Justices Ashok Bhushan and comprising R Subhash Reddy and MR Shah while hearing about the bunch of petitions demanding waiver of interest, or waiver of interest on interest on the suspended EMIs during moratorium period. The Supreme Court will continue the hearing of the case on 10 September.
While arguing whether banks should charge interest on moratorium period, Solicitor General Tushar Mehta told the Supreme Court, "The idea of the moratorium was to defer repayment to ease the burden caused by COVID and lockdown so that business can manage working capital. The idea was not to waive off interest. The effort is that those who are affected by COVID and facing distress get the benefit and those who are defaulters are not able to take benefit."
"The expert committee will come up with sector specific guidelines on September 6," Mehta told the apex court. Expert panel will decide on the sector-wise relief to ease stress caused by the pandemic, Mehta added. NDMA (National Disaster Management Authority) is not required to step in at this stage, Solicitor General added.
"Question is about the demands of compound interest in the meantime. Moratorium and penal interest cannot go together. RBI will have to clarify," said Justice Reddy, according to legal news website Bar & Bench.
The Centre and RBI on Tuesday informed the Supreme Court that the moratorium period on repayment of loans amid the COVID-19 pandemic is “extendable" by two years.
"We are in the process of identifying the distressed sectors to vary benefits as per the (COVID-19) impact of hit they have taken," Mehta said.
Finance Minister Nirmala Sitharaman on Thursday asked bankers to roll out loan resolution schemes by September 15. COVID-19 related distress must not impact their assessment of borrowers' creditworthiness, Sitharaman added.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!