The Supreme Court (SC) on September 28 heard a batch of petitions seeking interest waiver during the loan moratorium period.
A bench led by Justice Ashok Bhushan heard pleas seeking extension of the loan moratorium and waiver of accruing interest.
The matter will next be heard on October 5. The SC order asking banks not to declare accounts as non-performing assets (NPAs) for two months will continue.
The SC gave the Centre time to place an affidavit on record by October 1.
Solicitor General Tushar Mehta:
> Seek some more time to get back to the SC on the issue. "Little complex issue. Several economic issues are coming up," he said. (Inputs from LiveLaw)
> "SG informs that the issues are under active consideration of the Government and a decision is likely to be taken within 2-3 days" Justice Ashok Bhushan said. (Inputs from LiveLaw)
>"SG further states that he shall endeavour to circulate affidavit by Thursday so that decision taken by the Govt. May be intimated to the Counsel and it can be heard on Monday. Interim orders to continue," Justice Ashok Bhushan said.
Here's a quick recap of what happened previously:
The SC on September 10 said it had not yet decided on the issue of interest waiver, and is inclined to pass an order against levy of interest on interest.
On September 3, the SC instructed banks not to declare accounts as NPAs for two months.
The RBI had in March announced a moratorium on repayment of term deposits for three months, which was later extended till August 31. The move was intended to provide borrowers relief during the COVID-19 pandemic.
Also read: Banking Central | An ‘Aatmanirbhar’ interest waiver solution on the cards?
The measure was expected to give borrowers more time to clear payments of EMIs amid the economic fallout of the lockdown, without being classified as NPAs.
The SC has previously said there is "no merit in charging interest on interest".
The RBI had on June 4 said lenders will lose Rs 2 lakh crore if interest is waived during the moratorium period.
In its annual report, the central bank also said the moratorium on loan repayments could have an impact on the financial health of banks.
"Although gross and net non-performing asset ratios had come down in March 2020 along with receding slippage ratios, the economic fallout of the pandemic is likely to test this resilience, especially since the regulatory accommodations announced in the wake of the outbreak have masked the consequent build-up of stress," the RBI said.