SC Hearing on Loan Moratorium Highlights | Govt to file additional affidavit; hearing to resume on Oct 13

The Supreme Court (SC) on October 5 heard a batch of petitions seeking interest waiver during the loan moratorium period.

A bench led by Justice Ashok Bhushan heard pleas seeking waiver of accruing interest during the six-month loan moratorium period. Justices R Subhash Reddy and MR Shah are also on the SC bench.

The apex court granted time to the government and the Reserve Bank of India (RBI) to file additional affidavits. The hearing will resume on October 13.

SC observations: 

> The Centre's affidavit does not say what has been done with respect to the Kamath Committee report. (Inputs from legal news website Bar & Bench)

> The issue is not about placing report on record but about implementing the report. The Centre and the RBI should make certain orders so that people know what benefit is extended.

> Petitioners argue that many issues have not been dealt with in Centre's affidavit. The Kamath Committee report has not been brought on record.

> No consequential orders or circulars have been issued by the govt or the RBI for enforcement of the decisions.

> Grants time to RBI, Centre to file additional affidavits. The court also asks to also consider the issues raised by the real estate associations such as CREDAI and power producers.

Solicitor General Tushar Mehta to SC:

> There is nothing to hide (with regard to the Kamath Committee report), we will put the report on record. (Inputs from Bar & Bench)

Senior Advocate Aryama Sundaram to SC:

> The Centre's affidavit "eliminates the real estate sector from consideration and the affidavit does not touch us (real estate industry) at all". (Inputs from Bar & Bench)

Senior Advocate Kapil Sibal to SC:

> The issues are far more grave, because as on September 1, all our accounts are "non standard". (Inputs from Bar & Bench)

Senior Advocate V Giri, appearing for RBI, to SC:

> "A large percent of people feel that an interest on interest is hitting them very hard. There are further recommendations to be made, and they will be considered. If you feel the report is to be placed on record, we will do so." (Inputs from LiveLaw)

> Kamath Committee was constituted by the RBI. At the highest level, certain discussions have taken place, even during the hearing of writ petitions. This was also a statutory amendment and for circulars to be issued to the higher institutions.

Senior advocate Harish Salve, appearing for banks, to SC:

> "Our accounting frozen because SC Has restrained us from classification of accounts as NPAs. Will need 48 hours to get back to the court on the government's proposal". (Inputs from CNBCTV-18)

> The Government has a two pronged approach. It has allowed relief to small borrowers by fiscal support for interest on interest. The Kamath Committee recommendations take care of sectoral issues.

Here's a quick recap of what happened previously:

The RBI had in March announced a moratorium on repayment of term deposits for three months, which was later extended till August 31. The move was intended to provide borrowers relief during the COVID-19 pandemic.

The measure was expected to give borrowers more time to clear payments of EMIs amid the economic fallout of the lockdown, without being classified as NPAs.

The SC had on September 3 instructed banks not to declare accounts as non-performing assets (NPAs) for two months.

The central government on October 2 told the top court that it would waive compound interest on the repayment of loans of up to Rs 2 crore, a move that would provide relief to individual and MSME borrowers.

The SC has previously said there is "no merit in charging interest on interest".

The RBI had on June 4 said lenders will lose Rs 2 lakh crore if interest is waived during the moratorium period.