A Public Interest Litigation has been filed in the Supreme Court seeking directions to the Union of India and Reserve Bank of India to permit banks to offer a moratorium on payments to borrowers for the period of June to August and to issue a notification to all the banks to refrain from classifying any loan account as NPA for non-payment of EMI from April to August at the very least and further for considering rolling out a financial package primarily focusing the severely affected sections of the society and also keeping in mind an imminent third wave of coronavirus.
The PIL has been filed by Distress Management Collective, an NGO Trust, based in Delhi-NCR, through Advocate Jose Abraham.
According to the PIL , the petitioner organisation, has received requests to approach the Supreme Court from scores of people who fall in that middle class category and have availed loan from a bank. The prime grievance of this section of people is that they are facing extreme difficulty to pay the EMIs since the onset of the second wave of covid-19, especially due to the stringent state-wise lockdowns that have stretched beyond a month now.
It is stated that there are news reports that highlight how Covid-19 is pushing India’s middle class towards poverty. A report by Pew Research Centre states that about 32 million people were driven into poverty by the pandemic last year. The weekly extension of lockdowns since the last one and half month has resulted in more people from the middle class losing their jobs and those who have their jobs safe at the moment are facing prospects of substantial salary cuts.
The Petition further states that the Petitioner organization has also come to know from legal professionals, that many of their colleagues are severely affected by the pangs of Covid-19. It is a harsh reality that since 25th March 2020, a big section of lawyers have shifted from cities to their hometowns. It is also well known fact that since Covid-19 struck the country, the pace of work in courts across the country has slowed down. And this has affected the moderately successful lawyers or the first generation young lawyers.
The Small and Medium Enterprises(SME) Sector has also been badly jolted by the second wave of the pandemic. The emergence of the Covid-19 second wave has come at a time when the sector had hardly recovered from the blow received by the first wave , alleged the Petitioner.
The PIL Highlighted that the ongoing prolonged lockdown imposed by States such as Maharashtra, Delhi, Rajasthan, Madhya Pradesh, Karnataka, West Bengal, Tamil Nadu and Kerala have been really stringent, and that has actually dented the hopes of the affected daily wages earning class of a revival.
When the situation was not bad as it has been in the ongoing second wave, the Reserve Bank of India granted inter-alia the relief of moratorium for three months on March 27, 2020, which was subsequently extended to six months till August 31, 2020 on May 23, 2020. The RBI, on August 6, 2020, provided for the facility of restructuring loans.
It was urged by the NGO that the need of the hour is to support all the borrowers whether it is individual or small entrepreneurs who come within the ambit of the SME sector especially by taking into consideration the fact that the second wave of Covid-19 has affected the lives and livelihood of people in much more drastic manner. A resolution plan for restructuring loans is not adequate considering the plight of a large section of borrowers.
“It is imperative to state herein that there are media reports of May 26, 2021, which state that even chiefs of private sector banks have also met with the Respondent no.2 ( Reserve Bank of India) to pitch for a limited moratorium of payments and wider window to restructure dues. The precise demand of the bankers seemingly was to allow banks to offer a moratorium on payments between April and June” , the petition read.
The Petitioner had also sent a representation to the Respondent no.1( Union of India) on May 28, 2021, requesting to direct the Respondent no.2 to permit banks to offer moratorium on EMI payments for the months of June to August and also to not classify any loan account as NPA for non-payments of EMI from April to August at the very least as the one time re-structuring scheme is likely to be invoked by banks in August September.
Hence, a moratorium for the aforementioned period will allow the borrowers to keep their accounts standard and a financial package primarily focusing the severely affected and keeping in mind an imminent third wave is also a must.