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Supreme Court to continue hearing on loan moratorium pleas tomorrow

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New Delhi: The Supreme Court will hear the Union Government’s stand on the pleas filed regarding the moratorium on loan repayment and interest levied by the Reserve Bank of India (RBI) amid the COVID-19 pandemic.

A three-judge bench led by Justice Ashok Bhushan today heard Counsels’ arguments in petitions filed seeking extension of loan moratorium in wake of the pandemic, and will continue hearing the matter tomorrow. December 3rd 2020.

During the hearing today, Senior Advocate Ravindra Srivastava  appearing on behalf of an industry group submitted that the doctrine of “Parens Patriae” needs to be applied to counter the problems arising out of the current pandemic, and when this doctrine applies, the argument of financial constraint does not survive. The Argument of RBI that financial costs will be huge if more reliefs and schemes are given does not hold good. Srivastava added that there needs to be some mandate or some compulsion and leaving it to the banks to establish their own criteria will create subjectivity from bank to bank and the methodology will differ

Advocate Vishal Tiwari submitted that the date fixed for moratorium is 31st december which should be extended till 31st of March 2021.

Senior Advocate Rakesh Dwivedi stated that exercise of Article 32 in these matters will push authorities to see that needful is done for relevant sectors. The problems have been compounded by the pandemic and RBI needs to issue circulars to Housing banks.

Advocate Vivekanandh appearing for educational institutions stated that these institutions do not come under MSME’s. The specific needs of these educational institutions have not been taken into account by any circulars of RBI. Central Government must release post-metric scholarships, there is considerable delay in that from their end.

Senior Advocate Kapil Sibal appearing on behalf of CREDAI Mumbai submitted that the government has done nothing but has relied upon RBI circulars, and the only relevance given by the government is to borrower and lender. The Cnetral government has not applied its mind to the data which it has access to.

There was no business and a moratorium was given, why did a standard account become an NPA on September 1? This is violative of Article 19(1)(g).The Kamath Committee is an expert committee set up to regulate parameters between the borrowers & lenders and has nothing to do with Disaster. The GOI must apply its mind to the Real Estate sector, Sibal said

Senior Advocate Sidharth Luthra submitted that RBI needs to act, and the Central government is duty bound to act and the constitutional principles of Socio economic justice have to be looked at.

The Court had previously asked the Central government why credit-card users should be entitled to the benefit of compound interest waiver under RBI loan moratorium scheme even when they are not availing loans and only using the card to purchase goods.

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