Individual borrowers who defaulted on their loans are now a worried lot. They were hoping that the Supreme Court may provide relief considering the covid-19 pandemic deteriorated their financial conditions.
On Tuesday, the Supreme Court ruled out the extension of the moratorium. The apex court also said additional reliefs such as total waiver of interest could not be allowed as it affects depositors.
Besides industry association, some individual borrowers had also filed a plea in the Supreme Court to extend the moratorium and waiver of interest.
"The apex court had asked lenders not to classify delinquent customers as non-performing assets (NPAs). Lenders were slow in the recovery process as there was this case ongoing in the Supreme Court," said Mumbai-based Tarun Shetty, one of the 11 individual petitioners.
The 36-year-old believes that banks would now speed-up the recovery process. He, too, had defaulted on loans after a job loss, but lenders restructured his loans, and he has got a new job now. "Some other individuals who went to the court are yet to emerge out of the financial problems, and banks had also refused to restructure their loan," said Shetty.
Kolkata-based Sanjoy Chakraborty, 44, already had a bad experience with recovery agents. He claims that an agent threatened his mother, who was alone when the agent visited his house. Following this, he filed an FIR (first information report) with the local police.
Chakraborty suffered losses in his business and now works as a security guard. "Now that the court has said that there will be no extra relief, we will be at the mercy of recovery agents," said Chakraborty.
Banks could still restructure loans of delinquent borrowers on case to case basis. Under the Reserve Bank of India's restructuring plan, if a lender had accepted the restructuring request, it could not classify the loan as NPA. The difference is that if a bank now restructures the loan, it will classify it as an NPA.
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