SC hearing on Loan Moratorium Updates: The Supreme Court heard a batch of petitions seeking interest waiver during the loan moratorium period today (November 19). During the hearing it disposes petitions where petitioners are satisfied with compound interest waiver. The apex court has also directed power producers and other petitioners to submit suggestions before Reserve Bank of India (RBI) counsels. Further, it has asked the Centre and RBI to reply to suggestions put forth before the bench on November 19. The SC then directed for the case to be listed next week.
Prior to this, the case was listed for November 18, but the apex court adjourned the matter, Bar & Bench reported. The three-judge bench comprising of Justices Ashok Bhushan, R Subhash Reddy and MR Shah had earlier assembled on October 14, but adjourned the case till November 2. During proceedings on October 13, Justice Bhushan said that once the government has taken a decision, there wouldn't be any need to delay it further and the apex court will pass an order.
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 and expected to give them more time to clear payments of EMIs amid the economic fallout of the lockdown, without being classified as NPAs. On June 4, the central bank 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. Catch the latest updates here:
SC on Loan Moratorium LIVE | Case round-up
>> The three judge bench comprising of Justices Ashok Bhushan, R Subhash Reddy & MR Shah is hearing the case.
>> 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 and expected to give them more time to clear payments of EMIs amid the economic fallout of the lockdown, without being classified as NPAs.
>> 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.
>> The SC had on September 3 instructed banks not to declare accounts as non-performing assets (NPAs) until further orders after the Centre on October 2 told the apex court that it would waive compound interest on the repayment of loans of up to Rs 2 crore, a move that would provide relief to individual and MSME borrowers.
>> The SC has previously said there is "no merit in charging interest on interest".
>> The bench on October 5 heard pleas seeking waiver of accruing interest during the six-month loan moratorium period. The apex court granted Centre and the Reserve Bank of India (RBI) time to file additional affidavits.
>> The Supreme Court on October 14 adjourned its hearing on a batch of petitions seeking interest waiver during the loan moratorium period to November 2, which was further pushed to November 3.
>> The Supreme Court has adjourned its hearing on a batch of petitions seeking interest waiver during the loan moratorium period to November 2. The apex court has directed the government to come back "with an appropriate action."
>> Case was postponed to November 3 for hearing when Judges assembled to hear the interest waiver case. However, Solicitor General Tushar Mehta was unavailable for hearing as he has to appear in the pleas challenging the construction of the new Grand Vista in Delhi. Case has been adjourned to November 5 to accommodate the Solicitor General.
>> After a brief hearing on November 5, the case was adjourned to November 18.
>> The matter was adjourned to November 19 (today).
>> Supreme Court on November 19 disposes petitions where petitioners are satisfied with compound interest waiver. It directs power producers and other petitioners to submit suggestions before RBI counsels. Apex court has also directed Centre and RBI to reply to suggestions put forth before the bench. It has also directed for the case to be listed next week.
SC on Loan Moratorium LIVE | Proceedings on November 19 - Summary
> Supreme Court disposes petitions where petitioners are satisfied with compound interest waiver
> Directs power producers and other petitioners to submit suggestions before RBI counsels.
> Apex court has directed Centre and RBI to reply to suggestions put forth before the bench today
> Directs for the case to be listed next week.
JUST IN |
Supreme Court disposes off petitions in which the petitioners are satisfied with compound interest waiver. (Live Law)
SC on Loan Moratorium LIVE | Proceedings on November 19
> SG Mehta: You have been the custodian of Fundamental rights. But Dr Singhvi gives a political point by saying Centre did not take any step without SC's intervention. This is not correct, we announced packages in March this year.
> SC Bench: Mr Singhvi appeared for power generation companies. He will submit his arguments to SG and RBI. He may do so by tomorrow. Mr Duttas plea is disposed off. IA in that plea be kept alive. List matter next week
> Senior Adv V Giri: all those persons have issues they need to send representation to RBI. So that we can come with responses.
> SG Mehta: Atleast ask parties to submit synopsis so that we are not caught by surprise. Dr Singhvi made submissions which we were not aware of.
> Supreme Court: all parties to file short submissions/suggestions to RBI and Centre before the hearing so that appropriate response be given. (Bar & Bench)
SC on Loan Moratorium LIVE | Proceedings on November 19
> Senior Adv Rajiv Dutta: All this has happened only with the interference of this Court
> SG: Let us not go into all of this
> SC Bench: We are disposing off Mr Duttas plea
> Dutta: first two affidavits of RBI needs to be dealt with
> Justice Bhushan: We are disposing off your petition. You have already said twice that you want to
> Senior Adv Huzefa Ahmadi: We had filed an IA in Mr Dutta plea. Please keep it open
> SC to Ahmadi: Okay we will hear you.
> SC to Adv Dutta: You will file no more written submissions. We are disposing off the plea. Everyone you want your case to end. Everytime we are hearing you are interrupting us. (Bar & Bench)
SC on Loan Moratorium LIVE | Proceedings on November 19
> Singhvi: Banks are not proceeding to recover loans but then want to recover guarantees. Your lordship is not permitting something but its not like you don't do it from left hand but do the same thing from the right hand. Please formally issue notice and ask them to respond.
>SC Bench: We have heard you.
>SG: they can make a representation why to issue notice. Dr Singhvi may have some point or not have, he can approach RBI rather than keeping the matter pending
>SC Bench: Let suggestion go to RBI. But we are not deciding anything now
>Singhvi: But a one week time should be given so that they reply. (Bar & Bench)
SC on Loan Moratorium LIVE | Proceedings on November 19
> SC bench asks Advocate Singhvi for remedies
> The circular of the RBI dated October 6 has created inadvertent exclusions, says Singhvi (Live Law)
SC on Loan Moratorium LIVE | Proceedings on November 19
Senior advocate Abhishek Manu Singhvi for Power Producers.
> These are extraordinary situations. Also I am not asking for specific reliefs like liquidity injections or specific fiscal reliefs. Really my focus is on tweaker 2-3 issues arising out of RBI circulars has led to discrimination by inadvertence or design
> Power Producers have been recognised to have huge arrears arising out of unpaid dues. It is even pre covid, the Parliamentary standing committee talks about how they don’t get paid institutionally
> NPA’s created for non-payment of my consumed power
> Dues for consumed power as an ailment recognised by Government. Dues are 1.22 crore (Live Law)
SC on Loan Moratorium LIVE | Proceedings on November 19
Dr Abhishek Manu Singhvi for power producers:
> Not even the transmission, but it is the generating companies which are suffering the most. Now there is a total debt of 1.2 lakh crore.
> A large part of the borrowings cannot be restructured due to certain exclusions. A large part of the borrowings by LIC. These loopholes needs to be rectified by RBI. I am seeking actual relief.
> Such a clarification under Article 14 has no nexus to objective sought to be achieved.
> Benefit of restructuring should be allowed at an opt in or opt out stage. Here centre says restructuring can only be initiated at the instance of the lender. Minor tweaks are required. RBI needs to revisit the circular and make these changes.(Bar & Bench)
SC on Loan Moratorium LIVE | Proceedings on November 19
Dr Abhishek Manu Singhvi: I am grateful that SC has considered that these are extra ordinary times.
> I am not seeking liquidity injunctions for specific relief. Minor tweaking can give a relief to a lot of segments. It is nothing for which court needs to give a mandamus. These are circulars which needs to be inclusionary.
> Singhvi appears for association for generating companies: we are a special and abused class. Even Pre covid parliamentary standing committee on March 7 this year talks about how power must be supplied under schemes even if restructuring takes place.
> In the Additional affidavit filed on October 9 it notes that power sector has a huge importance for the ones who have taken power from them. (Bar & Bench)
SC on Loan Moratorium LIVE | Proceedings on November 19
Justice MR Shah: But question is who uses your credit card?
SG: Among both of us, I’m the less miser and hence I use it
Justice Bhushan: People with credit cards should not be given this benefit, they are purchasing things using the card and they dont have a loan.
SG: This is not a case of no action. Even if the petitioners say that there can be a better option that too cannot be an opportunity for this Court to interfere under Article 32. Sector specific plan is perhaps not possible in this case under 32 (Bar & Bench)
SC on Loan Moratorium LIVE | Proceedings on November 19
> SG Mehta: We have taken a decision that those who have paid EMIs during moratorium cannot be punished. Availed moratorium or not availed, or partly availed - all are eligible.Banks havs to lodge claim to SBI for which a separate nodal agency is created, they’ll verify, take it from Government and then pay it
> I am a credit card holder and I received SMS for ex gratia credit, says SG Mehta to which SC reverts with: "But do you need it? People like you should not get the benefit" (Bar & Bench)
SC on Loan Moratorium LIVE | Proceedings on November 19: Government says crediting compound interest is responsibility of banks
The Finance Ministry has through Solicitor-General Tushar Mehta told the apex court that it is the responsibility of banks to credit compound interest waiver for loans up to Rs 2 crore, "not for consumers to remind the banks of this scheme." (Bar & Bench)
SC on Loan Moratorium LIVE | Proceedings on November 19
Resolution can't be invoked before Dec 31, 2020. Pre-COVID defaulters can't benefit from fresh resolution framework, says Solicitor-General
> Resolution can't be invoked before Dec 31, 2020. Committee studied commercial situation, spoke to stakeholders Committee assessed stress in various sectors. Disaster Management Authority has done whatever it could. NDMA has already done what it could under law
> IBC process already suspended since March to stop companies from slipping into bankruptcy
SC on Loan Moratorium LIVE | Proceedings on November 19
> Justice Shah: Is it that Kamath committee's recommendations were not for big borrowers?
> SG clarifies they were for big borrowers. "Applicable to lending greater than 1,500 crore"
> SG: Those accounts not covered in Kamath committee reccos don't have to wait Banks already approaching account holders to get loans restructured
> SG: Complete elasticity given to banks, resolution plans, payment plan can be rescheduled. Granting moratorium based on income stream of borrower. Moratorium period can be granted as soon as resolution plan is approved
> SG: Those accounts not covered in Kamath committee reccos don't have to wait Banks already approaching account holders to get loans restructured. (Bar & Bench)
SC on Loan Moratorium LIVE | Proceedings on November 19: Solicitor-General Tushar Mehta
> Please have a look at Oct 9, 2020, affidavit. I am giving a broad outline without delving into the nitty grities.
> Several pleas came to be filed by several factors saying that sector specific plan should be evolved under Article 32 petition. Taking pandemic as a national disaster, these are valid measures taken by Govt of India through Finance ministry and RBI
> 20,000 cr Aatmnirbhar package announced, 19.8k cr liquidity to power distribution cos. We allowed loan restructuring since no more scope for further help by Centre. Relief was also given to real estate sector, 3 lakh cr for MSMEs
> SG lists out various measures taken by finmin and RBI. Restructuring and liquidity measures for sectors such as power, retail, MSMEs, etc
> SG refers for Kamath committee's report on restructuring of big loans. And separate mechanism for restructuring small loans by lending institutions is there (Bar & Bench)
SC on Loan Moratorium LIVE | Proceedings on November 19: SC resumes hearing.
A petitioner expresses gratitude towards FinMin, RBI for handholding small borrowers
Justice MR Shah: Then withdraw your petition (Bar & Bench)
SC on Loan Moratorium | Going any further from relief announced would be detrimental to economy, Centre tells SC
The official said the Centre's decision with regard to the question of waiver of interest on interest to bear the burden of compounding of interest in respect of certain categories of loans was taken…... Read More
SC on Loan Moratorium | Going any further from relief announced would be detrimental to economy, Centre tells SC
The Centre has told the Supreme Court that going any further than the fiscal policy decisions already taken, such as waiver of compound interest charged on loans of up to Rs 2 crore for six months moratorium period, may be "detrimental" to the overall economic scenario, the national economy and banks may not take "inevitable financial constraints". The Union Finance Ministry, through its additional secretary Pankaj Jain, filed the affidavit in compliance of the top court's October 5 order asking it to place on record the K V Kamath Committee recommendations on debt restructuring in view of COVID-19 related stress on various sectors as well as the notifications and circulars issued so far on the loan moratorium and financial difficulties.
SC on Loan Moratorium |
Moratorium period exceeding six months may result in vitiating overall credit discipline: RBI to SC
In an affidavit filed in the apex court in the loan moratorium case, the RBI has said that a long moratorium period could impact credit behaviour of borrowers and increase the risks of delinquencies…... Read More
SC on Loan Moratorium | Moratorium period exceeding six months may result in vitiating overall credit discipline: RBI to SC
A loan moratorium exceeding six months might result in vitiating the overall credit discipline, which will have a debilitating impact on the process of credit creation in the economy, the Reserve Bank of India has told the Supreme Court. In an affidavit filed in the apex court in the loan moratorium case, the RBI has said that a long moratorium period could impact credit behaviour of borrowers and increase the risks of delinquencies post resumption of scheduled payments. The banking regulator fled the affidavit in pursuance to the apex court's October 5 order asking the Centre and the RBI to place on record the KV Kamath committee recommendations on debt restructuring because of COVID-19 related stress on various sectors as well as the notifications and circulars issued so far on loan moratorium.
SC on Loan Moratorium | RBI's Affidavit
In its affidavit, the RBI has said that any waiver of interest on interest would entail significant economic costs which cannot be absorbed by the banks without serious dent of their finances, and this, in turn, would have huge implications for the depositors and the broader financial stability. It has also said that the apex court's interim order of September 4, restraining classification of accounts into non-performing accounts in terms of the directions issued by the RBI, may kindly be vacated with immediate effect. (PTI)
SC on Loan Moratorium | Finance Ministry's Affidavit
Earlier, the Finance Ministry had filed an additional affidavit in the apex court on October 2 saying it had decided to waive compound interest (interest on interest) charged on loans of up to Rs 2 crore for a six-month moratorium from individual borrowers as well as medium and small industries. The Kamath panel had made recommendations for 26 sectors that could be factored by lending institutions while finalising loan resolution plans and had said that banks could adopt a graded approach based on the severity of the coronavirus pandemic on a sector. (PTI)
SC on Loan Moratorium |
The three-judge bench resumed hearing on a batch of petitions seeking interest waiver on October 14. On October 18, the case was adjourned to November 2 and the apex court directed the government to come back "with an appropriate action."
Read here to see the full proceedings on October 14SC on Loan Moratorium |
The bench on October 5 heard pleas seeking waiver of accruing interest during the six-month loan moratorium period. The apex court granted Centre and the Reserve Bank of India (RBI) time to file additional affidavits.
Read here to see the full proceedings on October 5SC on Loan Moratorium | The Case So Far
SC on Loan Moratorium: The three judge bench comprising of Justices Ashok Bhushan, R. Subhash Reddy & MR Shah adjourned the case to today... Read More
SC on Loan Moratorium | The case so far: (4/4)
>> Case was postponed to November 3 for hearing when Judges assembled to hear the interest waiver case. However, Solicitor General Tushar Mehta was unavailable for hearing as he has to appear in the pleas challenging the construction of the new Grand Vista in Delhi. Case has been adjourned to November 5 to accommodate the Solicitor General.
>> After a brief hearing on November 5, the case was adjourned to November 18.
>> The matter was adjourned to November 19 (today).
SC on Loan Moratorium | The case so far: (3/4)
>> The bench on October 5 heard pleas seeking waiver of accruing interest during the six-month loan moratorium period. The apex court granted Centre and the Reserve Bank of India (RBI) time to file additional affidavits.
>> The Supreme Court on October 14 adjourned its hearing on a batch of petitions seeking interest waiver during the loan moratorium period to November 2, which was further pushed to November 3.
>> The Supreme Court has adjourned its hearing on a batch of petitions seeking interest waiver during the loan moratorium period to November 2. The apex court has directed the government to come back "with an appropriate action."
SC on Loan Moratorium | The case so far: (2/4)
>> 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.
>> The SC had on September 3 instructed banks not to declare accounts as non-performing assets (NPAs) until further orders after the Centre on October 2 told the apex court that it would waive compound interest on the repayment of loans of up to Rs 2 crore, a move that would provide relief to individual and MSME borrowers.
>> The SC has previously said there is "no merit in charging interest on interest".
SC on Loan Moratorium | The case so far: (1/4)
>> The three judge bench comprising of Justices Ashok Bhushan, R Subhash Reddy & MR Shah is hearing the case.
>> 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 and expected to give them more time to clear payments of EMIs amid the economic fallout of the lockdown, without being classified as NPAs.
SC on Loan Moratorium |
The Supreme Court will hear a batch of petitions seeking interest waiver during the loan moratorium period today (November 19). The case was listed for November 18 (today), but the apex court adjourned the matter, Bar&Bench reported. The three-judge bench comprising of Justices Ashok Bhushan, R Subhash Reddy and MR Shah had earlier assembled on October 14, but adjourned the case till November 2. During proceedings on October 13, Justice Bhushan said that once the government has taken a decision, there wouldn't be any need to delay it further and the apex court will pass an order.
Good morning! Hello and welcome to Moneycontrol's LIVE coverage of the Supreme Court hearing on the loan moratorium and interest waiver petitions. Stay tuned for the latest updates and developments on the same.
