On Thursday, the Centre told the Apex Court that issue pertaining to loan moratorium in view of the Coronavirus pandemic is a fiscal policy matter & the Govt has taken various proactive steps keeping in mind different sectors. While apprising the Supreme Court about the steps & measures taken so far by the Union Finance Ministry & the Reserve Bank of India (RBI), the Centre told a bench headed by Justice Ashok Bhushan that it is not a case of no action & no further indulgence may be given even if the petitioners say that there could be better option on this issue.
The bench, also comprising Justice R S Reddy & Justice M R Shah, was told by Solicitor General Tushar Mehta that to ask for sector-specific reliefs from the Supreme Court now is perhaps not a remedy available under Article 32 of the Constitution. The Supreme Court was hearing a batch of pleas relating to charging of interest on interest by banks on EMIs, which were not paid by the borrowers who availed of the loan moratorium scheme in view of the pandemic.
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The RBI had on March 27 issued the circular which allowed lending institutions to grant a moratorium on payment of instalments of term loans falling due between March 1, 2020, & May 31, 2020, due to the pandemic. Later, the moratorium was extended till Aug 31, 2020. The RBI & the Finance Ministry have already filed separate additional affidavits in the Supreme Court saying that the banks, financial & non-banking financial institutions will credit into the accounts of eligible borrowers by November 5 the difference between compound & simple interest collected on loans of up to Rs 2 crore during the moratorium scheme period.
During the hearing conducted through video-conferencing on Thursday, Mehta told the bench that it is the responsibility of banks to credit the difference between compound & simple interest collected on loans of up to Rs two crores during this period. He said the disaster management authority has taken all the steps which were required to be taken by it & the NDMA has already done what it could have under the law.
Centre has proactively taken steps through the Finance Ministry & the RBI, Mehta said, adding, These are all fiscal policy matters. He said if the court is satisfied that the Govt is examining these issues, taking adequate steps & grievance redressal mechanism lies within the system itself then further indulgence was not required.
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It is not a case of no action, the solicitor general said, adding, The Govt is on top of it. He said that several relief measures were announced & decisions were taken by the concerned authorities keeping in mind every sector.
Mehta referred to the special economic & comprehensive Aatma Nirbhar Bharat' package of Rs 20 lakh crore announced by the Govt in May & other relief measures to fight the pandemic. The bench also heard submissions of Senior Lawyer A M Singhvi who referred to issues pertaining to power sector, especially power generation companies.
The Top Court asked him to give his suggestions to Mehta as well as the counsel appearing for the RBI. Mehta & senior advocate V Giri, who was appearing for RBI, told the bench that there are different petitions before the SC on the issue & the lawyers may give short submissions to them so that they may respond.
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We permit counsel for the parties to submit their short submissions/suggestions to counsel for the RBI as well as solicitor general within 3 days, the bench said & posted the matter for further hearing next week. On Nov 5, the RBI had urged the Supreme Court to lift its interim order, which held that accounts not declared as non-performing assets till Aug 31 2020, aren't to be declared NPAs till further orders, saying it was facing difficulty due to the directive. In a relief to stressed borrowers who are facing hardships due to the impact of COVID-19 pandemic, the Supreme Court had passed the interim order on Sept 3.
The pleas pertained to the charging of interest on interest by banks on EMIs which have not been paid by borrowers after availing the loan moratorium scheme of RBI during March 1 to Aug 31. Earlier, the RBI had filed the affidavit saying that it has asked all banks, financial & non-banking financial institutions to take "necessary actions" to credit into the accounts of eligible borrowers the difference between compound & simple interest collected on loans of up to Rs 2 crore during the moratorium scheme.
Prior to this, the Central Govt had told the Supreme Court that lenders have been asked to credit into the accounts of eligible borrowers the difference between compound & simple interest collected on loans of up to Rs 2 crore during the RBI's loan moratorium scheme by Nov 5. The Govt had said that the ministry has issued a scheme as per which lending institutions would credit this amount in the accounts of borrowers for the 6-month loan moratorium period which was announced following the COVID-19 pandemic situation.
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