Apex court to hear requests for redress of loan moratorium on Thursday
The Supreme Court adjourned hearing on the package of petitions seeking relief from the six-month moratorium on loan repayments announced amid the covid-19 pandemic until Thursday. Earlier today, the Supreme Court postponed the hearing until the end of the council.
A bench, headed by Judge Ashok Bhushan and composed of Judges RS Reddy and MR Shah, postponed the hearing after Solicitor General Tushar Mehta said it would be difficult for him to attend the hearing in the second half of Wednesday day.
Petitioners seeking waiver of interest on interest include power producers and builders. They also searched interest relief billed by banks and non-bank financial corporations (NBFC). As of the previous hearing date, the court ordered all parties to file their documents.
The Center, in its affidavit filed in October, informed the court that it had decided to waive “interest on interest” during the six-month moratorium authorized by the Reserve Bank of India (RBI).
However, the composition of interest will only be canceled for micro, small and medium enterprises (MSME) and personal loans up to ??2 crores. The categories include loans to MSMEs, in addition to education, housing, consumer durables, credit cards, automobile consumption, and business loans.
The central government had also informed the judiciary that lenders had been asked to credit the accounts of eligible borrowers with the difference between compound and simple interest received on loans of up to ??2 crore during RBI’s loan moratorium program by November 5.
On October 14, the Supreme Court observed that the Center should implement “as soon as possible” the exemption from interest on loans up to a maximum of ??2 crore saying that ordinary man’s Diwali is in the hands of the Union government.
On September 3, the court adopted an interim instruction stating that accounts not reported as non-performing assets as of August 31 will not be reported as NPA until further notice. The interim order was extended on the last hearing date.
On May 22, the central bank extended its moratorium on term loans until August 31 as part of the nationwide lockdown due to covid-19. In March, the central bank authorized a three-month moratorium on payment of IMEs and all term loans due between March 1 and May 31.
Petitioner Gajendra Sharma argued that interest would continue to accumulate during the moratorium, which the borrower would ultimately have to pay. The petitioner argued that no interest should be charged during the moratorium because people are facing “extreme hardship”.
Sharma said it would be difficult to pay additional interest on top of regular IMEs.
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