Chairman of India’s largest mortgage lender HDFC Ltd, Deepak Parekh in his annual letter to shareholders has questioned the Supreme Court’s decision to bring the Reserve Bank of India (RBI) to clarify on issues relating to the loan moratorium. Deepak Parekh said that the incident was “indeed unfortunate” while he lauded the central bank for shouldering a huge burden to maintain financial stability while a pandemic wreaked havoc across the country. The veteran banker’s comments come weeks after the apex court asked the Reserve Bank and the ministry of finance whether interest would be charged on the interest of the deferred loan repayment during the moratorium.
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“The saga of the highest court of law questioning the RBI on the moratorium was indeed unfortunate. Why should a central bank have to be answerable to a court on basic principles which the financial sector operates on?” wrote Deepak Parekh in the annual letter. The Padma Bhushan awardee questioned as to why should the country’s central bank be answerable to a court on the basic principles on which the financial sector operates. “Interest payments on borrowings and loans are contractual obligations and when no laws are being violated then all efforts at this juncture must be channelled towards economic recovery rather than getting into legal wrangles,” Parekh went on to add.
HDFC with assets under management worth Rs 5.17 lakh crore at the end of the previous quarter is by far India’s largest mortgage lender. Deepak Parekh, in his letter, also said that the woes of India’s economy predate the coronavirus pandemic. “Given the immense constraints on fiscal finances, solutions have to be found which do not impinge on the limited resources of the government,” he added.
The Supreme Court had in May this year asked for the Reserve Bank of India to submit its response to a plea filed in the apex court requesting interest waiver during the moratorium period. However, in its hearing last month the Supreme Court did rule out a complete interest waiver, the court had observed that once the moratorium is fixed then it should serve the desired purposes and the government should consider interfering in the matter as it cannot leave everything to banks.
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