The Supreme Court on Monday asked the Centre and the Reserve Bank of India (RBI) about steps taken to implement the KV Kamath Committee report, which has made recommendations to bail out sectors affected by the Covid-19 stress.
A Bench led by Justice Ashok Bhushan said an additional affidavit filed by the government late last week does not address “several issues” raised in writ petitions highlighting the plight of borrowers, small and big, who are being charged compound interest, post the pandemic moratorium, which expired on August 31.
The additional affidavit had informed the Supreme Court about the government’s decision to “hand-hold” small and vulnerable borrowers and waive the compound interest (interest on interest) accumulated against their loans during the six-month moratorium period. But the waiver of compound interest is only applicable for loans up to ₹2 crore, the Ministry of Finance told the court. The relief of waiver of compound interest during the six-month moratorium will be for MSMEs, education, housing, consumer durables, credit card, auto, personal and consumption loans, all up to ₹2 crore.
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During the hearing, the court went on to ask the government whether it has so far issued any circulars, policy decisions, etc, based on the Kamath report, which has made suggestions for a loan resolution or restructuring scheme for 26 pandemic-distressed sectors. Senior advocate Aryama Sundaram said the real estate sector has been completely left out.
The court said the government and the RBI have brought nothing on record to show what has been done to implement the Kamath Committee report. At one point, Justice Bhushan asked why the report itself has not been placed on record in the court. “We have nothing to hide. We will put it on record. It (report) is available in the public domain,” Solicitor General Tushar Mehta, appearing for both the government and the RBI, replied.
Senior advocate V. Giri, also for the RBI, said the government is deliberating. Charging of compound interest post moratorium would hit the ordinary person hard. He assured the report would be placed on record.
The court said it was not just about placing the report on record but implementing it. The RBI and the government should issue circulars so that people know what benefits have been extended to them. “It will be done,” the government and RBI sides responded.
“When will it be done... This has been going on for long. There is a need for a proper restructuring scheme,” Justice M.R. Shah, on the Bench, said. Senior advocate Harish Salve, appearing for the banking association, said the delay is hurting the banks. “Whatever the relief, the weight of it will fall on the banks,” Salve said.
The government said banks have to put in a mechanism to take care of the loan resolution plans, post-moratorium, for both big and small borrowers. “We are trying to strike a balance here,” Justice Shah said.
The court allowed the parties to file their replies to the additional affidavit in a week. The Centre has to place on record the Kamath report along with circulars, policy decisions, if any, on the issue. The court scheduled the next hearing on October 13.