SC hearing on loan moratorium Highlights | Supreme court on September 2 heard petitions seeking interest waiver on the six-month loan EMI moratorium that was allowed by the RBI.
The Supreme Court (SC) on September 2 heard on a batch of petitions seeking interest waiver on loan moratorium granted by Reserve Bank of India (RBI).
The SC will resume hearing the case at 2 pm on September 3.
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.
Senior Advocate Rajiv Dutta for a petitioner to SC:
> By charging interest on interest, these banks are treating this as default, this is not default on my part. Instead of giving respite the banks are encashing on this. (Inputs from legal news website Bar & Bench)
> RBI is only a regulator and are not agents of the banks as they are treating themselves and it seems that the banks are hiding behind the RBI. They want banks to make profits during COVID-19.
> Interest on interest is absolutely and prima facie wrong and they cannot charge it.
Senior advocate Aryama Sundaram for CREDAI to SC:
> If interest cannot be waived off, Banks may at least reduce it to level to which depositors are paid. It is unfair to charge penal interest on borrowers and this may lead to increased NPAs. (Inputs from legal news website Bar & Bench)
Senior advocate KV Vishwanathan for CREDAI MCHI to SC:
> COVID-19 pandemic is a force majeure situation. Ask SC to direct RBI, bank to discharge duties under the Disaster Management Act (DMA). (Inputs from legal news website Bar & Bench)
> Objective of easing the burden is not achieved since the moratorium only postpones the burden, it does not ease it at all.
Senior advocate Ranjit Kumar for the Shopping Centres Association of India to SC:
> Shopping centres and malls have not done well during the lockdown as against pharma, FMCG and IT sectors that did well. Relief should be given sector wise.
> The question is not whether the Centre has power under the DMA or not. The power is there. The question is whether the power was used under the Act. (Inputs from Bar & Bench)
> Nobody is doubting the powers of the RBI. We know RBI is empowered under these statues.
Senior advocate Kapil Sibal for a petitioner:
> The power under the DMA has to be exercised by the National Disaster Management Authority (NDMA) which is assisted by an advisory council and headed by the PM. (Inputs from legal news website Bar & Bench)
> Seek complete waiver of interest, no question of interest on interest, we want a complete waiver of interest. We should not go under before the relief is granted to us because in that event it will be very difficult to revive the industry.
Solicitor General Tushar Mehta to SC:
> There were some options available for reviving the economy. One was to write off interest. Second was a more holistic option in which the first step would be to ease the burden of repayment of loans (Inputs from legal news website Bar & Bench)> Majority of the economy runs on not large corporates but on smaller businesses. Different sectors of the economy have been affected differently during COVID-19 and the lockdown.