Top Court Lists Hearing On Centre's Interest Waiver Plan For Wednesday

The Supreme Court today adjourned a hearing in the matter of waiving "interest on interest" on loans up to Rs 2 crore, frozen during a six-month moratorium granted because of the coronavirus crisis, to Wednesday. The top court was due to hear the matter on Tuesday on a waiver of interest on deferred EMIs - or interest on interest - to help small borrowers during the coronavirus pandemic, after it told the government last week that its affidavit "fails to deal with several issues raised by petitioners" and asked for more details from the RBI and centre on their plan to help the borrowers..The outcome of the case could have far-reaching consequences not only for millions of borrowers, but also for banks..The government has already told the court it would waive the compound interest on loans up to Rs 2 crore under a COVID-19 support plan, in a move that will bring relief to millions of borrowers. It has also said it would not be possible to further supplement the already-announced relief packages, requesting the court not to permit any further judicial review by the petitioners..Last week, the Reserve Bank of India appealed to the top court to let banks classify loans as non-performing assets - or bad loans - saying a ban imposed to help borrowers in the COVID-19 pandemic could greatly harm the country's financial system..In a filing to the Supreme Court late on Friday, the RBI warned that failure to immediately lift an interim stay on banks classifying any loan as a non-performing asset would also undermine the central bank's regulatory mandate..In its October 5 order, the Supreme Court had asked the government to consider the concerns of real estate companies and power producers in a fresh plan on interest waiver..According to the government's filing to the top court earlier this month, the interest waiver will apply for loans taken by micro, small and medium enterprises (MSMEs) for educational, housing, consumer goods and auto loans, and for credit card dues..For the categories specified by the government, the waiver on interest will be irrespective of whether the borrower availed of the moratorium..The government's decision marked a shift from its earlier stance to say 'No' to any interest waiver as it would affect banks..The RBI had granted borrowers an option to delay their EMIs for six months, till August 31, as the coronavirus pandemic-related restrictions pushed the economy into a record 23.9 per cent crash..The centre and the RBI have already told the top court that the moratorium can be extended by up to two years.

Top Court Lists Hearing On Centre's Interest Waiver Plan For Wednesday

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