SC Adjourns Loan Moratorium Hearing for Second Time To 18th November

Supreme Court  Adjourns Loan Moratorium Hearing for Second Time To 18th November

The Supreme Court deferred its hearing to take up pleas seeking an extension of the Reserve Bank of India (RBI) COVID-19 induced loan moratorium and the waiver of accruing interest for a second time due to the unavailability of Solicitor General Tushar Mehta.

The RBI informed the Supreme Court today that it was aiming to elevate the restrictions imposed by Supreme Court against those protected accounts, from being declared as Non-performing Assets (NPAs), which were not classified as NPAs on August 31.

Senior Advocate V Giri, appearing on behalf of RBI, contended that the bank and the Finance Ministry have already filed a separate additional affidavit declaring that the banks, financial and non-financial institutions will credit the difference between compound and simple interest collected on loans of up to sum of Rs. 2 crores during the moratorium scheme period into accounts of eligible borrowers which comes into force by November 5.

However, even with the new scheme, the interim order proclaiming that banks are not allowed to declare accounts as Non-Performs Assets stood valid. Meanwhile the banks were given the leverage to make their claims by December 15 at the State Bank of India (SBI), and the government will render compensation for compound interest.

The Supreme Court, two judges' bench, comprising of Hon'ble Justices Ashok Bhushan adjourned the matter till 18th November. It has however, allowed the parties involved to circulate short notes.

Senior Advocate Rajiv Dutta appeared on behalf of the individual borrowers and expressed his gratitude for the Scheme of Waiver of Interest On Interest for Eligible Borrowers. He further added, "I am extremely grateful to the Union of India, Ministry of Finance & RBI for holding the hands of small borrowers. My lords may kindly dispose my writ today."

Earlier on October 14, the bench had directed the Centre that even though it had welcomed its decision of relieving the small borrowers, there was no reason to delay the implementation of the said decision.

The bench remarked, "their Diwali is in your hands, Mr. Mehta," to the Solicitor General Tushar Mehta. The law officer had then informed the bench that there was diversity in lending and different modalities are required to be followed. "Consultations are on between the required stakeholders," the bench added.

Previously the bench had indicated that the would be taking the matter on 2nd November and expected the Government to brief the Apex Court about the implementation of the aforesaid benefits. However, on 2nd November the bench had adjourned the petitions for 5th November.

The affidavits which have been recorded were filed in response to a set of pleas in the top court, raising issues pertaining to validity of RBI's March 27 circular which allowed lending institutions to grant Moratorium on payment of installments of term loans failing due between March 1, 2020 and May 31 this year due to the pandemic. Though, the duration of moratorium was extended till August 31st.