The Finance Ministry on September 10 said it has constituted a three-member expert committee to assess the impact of a waiver of interest and interest on interest accrued during the six-month moratorium period announced in wake of the COVID-19 pandemic.
The committee will be chaired by Rajiv Mehrishi, former Comptroller and Auditor General (CAG) of India. Ravindra H Dholakia, former member of the Reserve Bank of India's Monetary Policy Committee, and B Sriram, former managing director of the State Bank of India and IDBI Bank, are the other two members.
"Various concerns have been raised during the proceedings of the ongoing hearing in the Supreme Court of India, in the matter of Gajendra Sharma versus Union of India and others, of the matter regarding the relief sought in terms of waiver of interest and waiver of interest on interest and other related issues," the ministry said in a statement.
The government said that the committee's terms of reference include assessment of the impact of the interest waiver on the Indian economy and financial stability. It will also table suggestions to mitigate financial constraints of various sections and measures to be adopted for the same.
The committee will submit its report in a week, during which time it can consult banks or other stakeholders.
This comes at a time when the Supreme Court is hearing a batch of petitions seeking interest waiver during the loan moratorium period. A three-judge bench on September 10 adjourned the hearing to September 28, adding that no further adjournment would be allowed in the matter.
In the meantime, the apex court ordered an interim extension of the loan moratorium period, while reiterating that its September 3 order directing banks not to declare accounts as non-performing assets (NPAs) will remain in effect until further orders.
In March, the Reserve Bank of India (RBI) had granted a three-month moratorium on repayment of term deposits, which was later extended until August 31. The move, aimed at providing borrowers relief during the COVID-19 pandemic, covered both interest and principal repayment.