New Delhi (ILNS): Solicitor General Tushar Mehta today told the Supreme Court that the government will ensure that those who paid up during the moratorium period are not short-changed. Will ensure those who paid during moratorium aren’t short-changed. The court also observed that credit card users shouldn’t be given benefit of compound interest waiver, because credit card users aren’t borrowers. “They don’t have a loan, they’re purchasing,” observed Justice MR Shah.
The court was hearing arguments in the loan moratorium case.
When the petitioner expressed gratitude towards the finance ministry and the RBI for handholding small borrowers, the judge commented lightly: “Then withdraw your petition.”
Following Mehta’s overview of the entire situation, Senior Counsel Rajiv Dutta said that the court should deal with the government declaration of the pandemic being a force majeure before disposing of the petition. The bench asked him to give this writing.
Elaborating on the government’s actions during the pandemic, Mehta referred to the Centre’s affidavit on November 9, which outlined the several petitions filed by various sectors for specific relief.
He said that the finance ministry and the RBI took various measures to ensure relief to various sectors.
He listed the various measures such as restructuring and liquidity for sectors such as power, retail, MSMEs, etc. He said that a Rs 20,000 crore Aatmanirbhar package had been announced, a Rs 19,800 crore liquidity was advanced to the power distribution companies.
He said: “We allowed loan restructuring, since there was no more scope for further help from the Centre. Relief was given to the real estate sector and Rs 3 lakh crore for MSMEs.”
The SG also referred to the Kamath committee’s report on restructuring of big loans, also a separate mechanism for restructuring of small loans.
He said: Those accounts are not covered in Kamath committee recommendations. Banks already are approaching account holders to get loans restructured. Complete elasticity has been given to banks and resolution plans, payment plans can be rescheduled.”
He suggested granting moratorium based on income stream of borrower. He said moratorium period can be granted as soon as the resolution plan is approved.
He, however, clarified that the resolution cannot be invoked before December 31,and added that pre-COVID defaulters cannot benefit from the fresh resolution framework.
Regarding the role of the Disaster Management Authority, the SG assures the bench that it has done whatever it could. “The NDMA has already done what it could under law,” he said.
Regarding companies slipping into default, he said that the IBC process has been suspended since March to stop companies slipping into bankruptcy.
The finance ministry counsel told the bench that it was the responsibility of the banks to credit compound interest waiver for loans up to Rs 2 crores, not for consumers to remind the banks of this scheme.
The SG requested the court to not consider further relief to borrowers. He said: “The government is on top of it” and is taking required measures.
Senior Advocate AM Singhvi, arguing for power generating companies, said: “Not asking for liquidity injections, specific relief. My focus is on tweaking issues from RBI circulars. Many issues with RBI circulars need to be clarified. RBI circulars intended to give relief, but significant exclusions hurt us.”
The matter has been adjourned till next week.
The bench has instructed all parties to submit their written submissions to the RBI and the Centre for appropriate responses.
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