Loan moratorium case: Supreme Court to hear interest waiver case today

Source:-https://www.timesnownews.com

New Delhi: The Supreme Court has rescheduled the hearing on petitions seeking relief in the form of extension of loan moratorium period beyond six months or waiver of interest on interest to Wednesday (October 15). Note that the top court was to start the proceedings at 12 pm today but the bench of Justices Ashok Bhushan, R Subhash Reddy and MR Shah will now take up the case tomorrow for hearing at the end of the board.

The apex court on October 5 expressed displeasure at the response of the Centre and the RBI and wanted a categorical response on what all has been done for providing relief via loan restructuring as recommended by the Kamath committee. For the uninitiated, Kamath Committee had proposed graded corporate loan restructuring for big borrowers. Centre and RBI will have to state which recommendations have been accepted and whether they have been put out in the public domain.

RBI opposed any intervention, submitting that their dialogue on loan relief with Centre and other stakeholders can’t be subject to judicial review. RBI stated that the decision to handhold small borrowers was taken at the highest level, and the Kamath Committee was looking into sector-wise loan restructuring plans.

It is worth noting that while Centre had proposed compound interest waiver on loans up to Rs 2 crore during the moratorium, the top court observed that no consequent RBI circular was issued in this regard. Centre will have to reply on how banks will implement its proposal to waive compound interest.

Last week, The RBI has filed an affidavit in the SC on the Moratorium Case urging the court to not undermine its regulatory mandate and lift the stay on the classification of NPS opposing any extension of loan moratorium. RBI further stated that extending it any further would impact the credit discipline.

The RBI maintained that further relief other than categories pointed out by the Finance Ministry will not be possible and that moratorium was only temporary relief. The RBI has taken the same stand as the Centre pointing out how it is not possible to extend the moratorium.