NPA moratorium plea filed before Supreme Court

NPA moratorium plea filed before Supreme Court

Plea seeks relief to borrowers and temporary case on the declaration of NPA by banks due to the second wave of COVID-19 pandemic in India

A plea has been filed before the Supreme Court of India to provide immediate relief to borrowers facing actions by banks for their failure to meet their loan repayment obligations.

The plea filed by Advocate Vishal Tiwari seeks SC direction to banks to provide relief to borrowers in the form of a fresh loan moratorium, an extension of time under the restructuring scheme and a temporary case on the declaration of NPA by banks in the wake of the outbreak of the second wave of COVID-19 pandemic in the country. The plea states that borrowers are under tremendous stress and facing hardships due to the existing market situation following lockdown imposed in various states.

The plea wants SC direction to banks and financial institutions to desist from taking any action including freezing bank accounts of borrowers who might have defaulted in repayment of loans and auctioning their properties for six months.

It has also sought directions to the Respondents to permit the lending institutions to grant interest-free moratorium period for term loan and defer the payment of loan instalments for six months or till the pandemic-induced situation normalises.

The plea has argued that the Central Government and its concerned ministries along with the Reserve Bank of India have failed to provide any respite under the existing situation to the stressed sectors and individuals currently struggling for existence.

According to the petitioner, the circular issued by RBI on 6.5.2021 for resolution plan 2.0 cannot be said to provide adequate relief to all in the present circumstances since it is arbitrary, unfair and just an eyewash.

"Such non-action and reluctance on the part of the Respondents have violated the fundamental rights of livelihood and dignity and therefore requires the immediate intervention of this Court in the interest of public justice," the plea reads.

The petitioner has made the following suggestions:

* Property taxes, fines and penalties should be waived during all lockdown

* Salaries be paid via direct transfers to the staff to those firms who paid salaries during last year's lockdown by taking the ECLG loans

* Moratorium should be given for at least two years without interest piling up which needs to be pause completely as principal amount went up substantially with huge compound interest after last year's lockdown

* ECLG loans should be given again; rents, electricity and phone bills also need to be disbursed.