Supreme Court reserves order on loan moratorium

The Supreme Court on Thursday reserved its verdict on pleas for the extension of the loan moratorium period. The bench comprising Justices Ashok Bhushan, R. Subhash Reddy and M.R. Shah reserved judgment on the batch of petitions seeking relief in the form of extension of the RBI's loan moratorium period beyond six months or waiver of interest on interest in view of the Covid-19 pandemic.

During its previous hearing on December 16, the Reserve Bank of India (RBI) and the Indian Banks Association (IBA) had urged the apex court not to pass any further orders on petitions asking for financial aid.

The RBI had on March 27 announced a loan moratorium scheme, which allowed lending institutions to grant a temporary relief on payment of installments of term loans falling due between March 1, 2020, and May 31, 2020, due to the pandemic. Later, the moratorium was extended till August 31 this year. The move was intended to provide borrowers more time to pay EMIs amid the economic fallout due to Covid-19 pandemic-led nationwide lockdown, without being classified as a bad loan. The Supreme Court had instructed banks to not declare accounts as NPAs until further orders.

Senior Advocate Ravindra Srivastava made rejoinder submissions and said no authority seems to be looking into the grievances of the borrowers. On behalf of the Chhattisgarh industry bodies, he said the impact of Covid-19 is continuous and many people are still suffering financially.

He said this is a case where the NDMA should have made a comprehensive property instead of handing over the burden to the banks. He went on to say that NDMA has to collect empirical data and there can be a partial waiver also but for this there is a need for a calibration.

NDMA has to collect empirical data and make a comprehensive policy, not arguing that there needs to be a complete waiver. There can be a partial waiver also but for this, there is a need for a calibrated policy under the Disaster Management Act (DMA), Srivastava said.

Also Read: Telangana High Court raps Centre over delay in responding to notice on citizenship of TRS MLA

In October, the Centre had ordered that it would waive compound interest on repayment of loans up to Rs 2 crore in some categories that has provided marginal relief to individual and MSME borrowers.