Asking the Centre to implement “as soon as possible” interest waiver on loans of up to Rs 2 crore in view of the Covid-19 pandemic, the Supreme Court Wednesday said the common man’s Diwali is in the hands of the government and the banks.
“Something concrete has to be done,” a bench headed by Justice Ashok Bhushan said, adding, “benefits of waivers to borrowers up to Rs 2 crore must be implemented as soon as possible”.
The top court told the advocates appearing for the Centre and banks: “Diwali is in your hand”.
Hearing a batch of petitions which have raised issues concerning the six-month loan moratorium period announced due to the COVID-19 pandemic, the apex court sought to know from the Centre if the benefit of loan interest waiver for borrowers of up to Rs 2 crore during the moratorium period has “percolated” to the common man, and questioned the government over its delay in the implementation of the waiver.
“The government has taken a welcome decision taking note of the plight of common man. But you have not issued any order to anybody. You have simply given us the affidavit,” the bench told Solicitor General Tushar Mehta.
During the hearing conducted through video-conferencing, Mehta told the bench that the Centre has taken an “informed decision” and has taken a “huge burden”. “When Central Government says on an affidavit that it will be implemented then there should not be any apprehensions,” he said.
He said banks would waive interest on interest and then will be compensated by the government and calculation will have different modalities.
“We welcome the decision of the Centre, only thing it should be translated practically,” the court responded. The bench, also comprising Justices R S Reddy and M R Shah, said when authorities have decided something then it has to be implemented.
Senior advocate Harish Salve, appearing for banks association, told the bench that banks would implement whatever decision have been taken by the government.
Senior lawyer Rajeev Dutta, appearing for one of the petitioners, said the banks are capitalizing by taking interest on interest on existing loans. “We are small people with small loans (less than Rs 2 crore). They should not compound the interest in these cases,” Dutta said. To this, the bench said it has already ordered that banks cannot declare NPAs.
Adjourning the matter till November 2, the top court said it hopes that the government will act by then.
Earlier this month, the Centre had agreed in the Supreme Court to waive compound interest charged on loans of up to Rs 2 crore for a six-month moratorium period announced due to the COVID-19 pandemic.
It said the government will seek due authorisation from Parliament for making appropriate grants in this regard and “the endeavour shall be over and above the support of Rs 3.7 lakh crore to MSMEs, Rs 70,000 crore for home loans etc. already extended through the Garib Kalyan and Aatma Nirbhar packages announced by government earlier”.
Prior to this, the Centre had told the top court 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.
Last week, the Reserve Bank of India (RBI) told the Supreme Court that continuation of the loan moratorium period beyond the six months already granted may affect overall credit discipline and small borrowers will eventually feel the pinch.
Initially, the RBI on March 27 had issued the circular which allowed lending institutions to grant a moratorium on payment of instalments of term loans falling due between March 1, 2020, and May 31,2020, due to the pandemic.
Later, the period of the moratorium was extended till August 31 this year.
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