Moratorium regime on loans | Supreme Court strikes at the Center
Don’t hide behind RBI … consider providing relief, the court said.
The Supreme Court on Wednesday criticized the Center for “hiding behind the Reserve Bank of India” without commenting on the moratorium regime on loans put in place during the COVID-19[female[feminine pandemic.
The court wanted to know if the deferral of loan interest Supporting borrowers in their financial crisis during the nationwide lockdown would lead to additional interest accrual once the freeze is lifted on August 31. The government has yet to file its affidavit.
Noting that the matter had been indecisively pending for a few months now, the court advised the government against taking a blind view, focusing only on the affairs of the banks and not caring about the fate of those financially crippled by the “problems. created by your foreclosure. ”The court said the government was empowered to take an independent position under the Disaster Management Act.
“The problem was created by your lockdown … It seems the Indian Union is not taking an independent stance and relies on the Reserve Bank of India (RBI) … Now is not the time to only deal with business, consider providing relief, ”a judiciary headed by Judge Ashok Bhushan addressed Solicitor General Tushar Mehta.
‘Government. work in tandem with RBI ‘
Mr Mehta said the government was working in tandem with the central banker and that it was unfair to say that it did not have an independent point of view. The court gave the Center until September 1 to file a detailed affidavit, exposing its position.
The court had tried to strike a balance between the interests of the banks and the borrowers.
“We’re trying to balance. If there can be an elaborate system … Our concern in this proceeding is only whether the interest that has been deferred will be added to the charges payable later and whether there will be interest on the interest, ”argued bedroom.
The debate was sparked by the RBI’s response to the court that it would be unwise to opt for a forced waiver of interest, risking the financial viability of the banks it was responsible for regulating and jeopardizing the interests of depositors. .
The court is hearing a petition filed by Gajendra Sharma challenging the imposition of an interest rate on loans even during the three-month moratorium period declared amid the COVID-19 pandemic and national lockdown.
The central banker, in his affidavit, had said his regulatory package introduced amid the pandemic lockdown was “in its essence in the nature of an adjournment of the moratorium and cannot be interpreted as a waiver.”
“Banks are business entities that act as intermediaries between depositors and borrowers. They are expected to operate on viable business considerations, ”the affidavit said.
He believed that the banks were the custodians of depositors’ money.
The RBI notification of March 27 was at the heart of the petition challenge.
“Interest charged during the moratorium period would be added to IMEs at the end of a three-month forbearance. It will have to be paid in one go or be divided equally among all future IMEs. The monthly bill from clients will increase … In the current scenario, when all livelihoods have been reduced by the Indian government by the imposition of foreclosure and the petitioner has no means of earning a living, the imposition of interest will defeat the very in order to authorize a moratorium on loans, ”argued the petition.