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The Supreme Court of India. Photo: Mint
The Supreme Court of India. Photo: Mint

SC extends interim order on loan moratorium till 28 September

  • The apex court adjourned the case for the last time, granting the Centre, RBI and banks two weeks’ time to work together and file a concrete reply on their stand on waiving of interest charged during the moratorium period

NEW DELHI: The Supreme Court on Thursday ordered interim extension of loan moratorium till 28 September, directing banks not to tag any loans as non-performing till further directions. The apex court adjourned the case for the last time, granting the Centre, Reserve Bank of India (RBI) and banks two weeks to work together and file a concrete reply on their stand on waiving of interest charged during the moratorium period.

The interim order was passed by the apex court bench headed by Justices Ashok Bhushan and comprising R Subhash Reddy and MR Shah while hearing a batch of petitions seeking waiver of interest, or waiver of interest on interest on the suspended EMIs during the extended moratorium period amid the nationwide lockdown due to the covid-19 outbreak.

The apex court will continue hearing in the case on 28 September.

The three-judge bench took on record the submissions made by the solicitor general Tushar Mehta, representing the Centre. It noted that the government at the highest level was considering all the issues in this batch of plea related to loan moratorium. The government shall within a period of two weeks file a concrete response holistically considering all the sectors.

The order also noted that an expert committee had been constituted to look into all the issues and action will be taken by the government.

The court took on record the concerns raised by senior advocate Harish Salve for Indian Banking Association (IBA) with respect to individual borrowers apart from other sectors that individuals shall be adversely affected and decisions need to be taken through finance ministry and not just the RBI.

Senior advocate Kapil Sibal, representing Real Estates Associations, argued that the "downgrading of borrowers is still continuing. Borrowers must be protected against such downgrading."

Salve and Mehta opposed the plea for downgrading and sought two weeks’ time to cater to this issue. Salve, while requesting the bench said, “Please don't pass any orders on downgrading today because this is based on many factors. Companies will suffer."

“We are inclined to grant two weeks to file appropriate affidavit. We make it clear that we shall consider different prayers made by petitioners on the next date. All decisions taken by the RBI, GOI or the banks should be placed before the Court for consideration," said the bench in its order.

On 3 September, the court had passed an interim direction holding that the accounts not declared as non-performing asset (NPA) as on 31 August shall not be declared as NPAs till further orders.

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.

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