Supreme Court Gives Centre 1 More Week To Submit Loan Moratorium Plan

Supreme Court Gives Centre 1 More Week To Submit Loan Moratorium Plan
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  1. “I assure you that it is under consideration and it is at a very advanced stage,” Solicitor General Tushar Mehta, representing the centre and the RBI in the case, told the Supreme Court, seeking more time to submit the government's plan.
  2. The decision on the matter is likely in 2-3 days and will be emailed to the appearing counsel by October 1, he told the top court. 
  3. In its September 10 order, the top court had directed the government to submit the plan detailing the compound interest to be charged and any resultant impact on the credit rating of the borrowers, stating that the plan must be presented in the September 28 hearing.
  4. The centre has set up an expert panel, under former Comptroller and Auditor General (CAG) Rajiv Mehrishi, to look into the issue of interest being charged by banks on instalments deferred during the moratorium period due to COVID-19 pandemic.
  5. In some relief to stressed borrowers, the Supreme Court had ruled earlier this month that loan accounts of borrowers availing the moratorium - or a delay in loan repayments - will not be declared as bad loans till further orders.
  6. The borrowers need to be protected and banks should not take any coercive action against them, the top court had held.
  7. A number of associations representing sectors such as banks and real estate developers are part of the hearings.
  8. While the petitioners demand a waiver of interest on interest (interest for exercising the option to suspend EMIs due to COVID-19), the government is of the view that writing off interest will weaken banks and affect economic conditions.
  9. The centre and the Reserve Bank of India have told the top court that the loan moratorium can be extended by up to two years on account of the coronavirus-related situation.
  10. The Reserve Bank of India (RBI) had in March granted a three-month loan moratorium due to the pandemic-induced situation, and later extended it till August 31 in May.
     
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