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Govt. Informs Supreme Court that Decision on Loan Moratorium Will Be Taken Soon

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Angry at the government dilly-dallying on waiver of interest on bank loans during six months of moratorium period with euphemism of under active consideration, the decision making process at a very advanced stage and a decision may be in 2-3 days, the Supreme Court sought its final call on an affidavit by Thursday.

The Bench, headed by Justice Ashok Bhushan, fixed further hearing the next Monday to decide the matter, saying that it cannot let the matter remain suspended since the case is pending since early May as it wants to ease the financial burden on borrowers during the pandemic and help those who assumed moratorium means no recovery of loan or interest.

“We will fix the matter for Monday (October 5). Whatever is your policy, whatever you have, you circulate it. The government decision should be brought on record along with an affidavit. We will take it up on Monday. We don’t want any further adjournment,” said the Bench which included Justices R Subhash Reddy and M R Shah as the two other judges. It also extended the stay of September 3 on banks not to declare accounts as non-performing assets (NPAs) for two months.

The Bench is hearing a batch of petitions, including one by Agra’s Gajendra Sharma who had taken home loan from a bank and came to the Apex Court against the bank not only charging interest but even compound interest on the interest even while deferring payment of the instalments as per the RBI directive. Both the government and the RBI had earlier justified the banks levying the interest lest they are unable to pay the interest to the depositors.

The Court asked solicitor general Tushar Mehta to circulate the affidavit to all parties in the case, who are seeking waiver of interest on loan instalments and an extension of the moratorium and waiver of the accruing interest. In one of the hearings, Mehta had claimed the government was contemplating extending the moratorium that ended on August 31 for two years, but that turned out only to buy more time from the court.

When Mehta pleaded to give the government some more time, the Bench said it was giving one week more as the last resort. The hearing was postponed to September 28 only on his request. Mehta said it is a little complex matter as “several economic issues are coming up” and the government is taking all kinds of matter and it is almost in the advanced stage of taking a decision on the issue. On September 10, the court had said it was inclined to pass an order against levy of interest on interest.

Senior advocate Rajiv Dutta, appearing for the main petitioner Gajendra Sharma, wanted an early listing of the case, pointing out that the banks are acting as if it is a very normal issue since they have already deducted the interest while it is very important matter for the borrowers.

The government had told the court in one of the hearings that waiver of interest on deferred EMIs during moratorium period would be against “the basic canons of finance” and unfair to those who repaid loans as per schedule. However, RBI has come out with a scheme which provides for extension of moratorium for two years to certain stressed borrowers, the Centre had informed the top court.

SMEStreet Edit Desk

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