SC on Loan Moratorium LIVE Updates | Supreme Court adjourns case to November 5

Supreme Court bench has adjourned the case to November 5 to accommodate the Solicitor General Tushar Mehta who is unavailable for hearing as he has to appear in the pleas challenging the construction of the new Grand Vista in Delhi.

>> 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 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 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 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. (Full proceedings)
>> 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 (today).
>> 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." (Full proceedings)
>> Case was postponed to November 3 (today) for hearing
>> Supreme Court Judges assembled to hear the interest waiver case. However, Solicitor General Tushar Mehta is 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.

SC on Loan Moratorium LIVE: The three judge bench comprising of Justices Ashok Bhushan, R. Subhash Reddy & MR Shah adjourned the case to today on October 13... Read More

Supreme Court Judges have assembled to hear the interest waiver case. However, Solicitor General Tushar Mehta is 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 Nov 5 to accommodate the Solicitor General. (CNBC-TV18)

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)

The had announced a moratorium on repayment of term deposits for 3 months citing COVID-19 pandemic in March. Later it was extended till August 31 to give borrowers more time to clear payments of EMIs,…... Read More

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. Read more here

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)

The top court is hearing the petitions, including the one which has sought a direction to declare the portion of an RBI notification, issued on March 27, "ultra vires to the extent it charges interest on the loan amount during the moratorium period..."
> The Reserve Bank of India (RBI) filed an affidavit in the apex court recently saying that 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.
> Separately, the Centre has also filed an affidavit saying 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".
> These affidavits were filed following the top court's October 5 order asking them to place on record the K V Kamath committee recommendations on debt restructuring because of the COVID-19 related stress on various sectors as well as the notifications and circulars issued so far on loan moratorium. (PTI)

SC Hearing on Loan Moratorium Highlights | A bench led by Justice Ashok Bhushan heard pleas seeking waiver of accruing interest during the six-month loan moratorium period.... Read More

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 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 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.

Senior advocate Harish Salve, appearing for banks, to SC on October 5: "Our accounting frozen because SC Has restrained us from classification of accounts as NPAs. Will need 48 hours to get back to the court on the government's proposal". (CNBCTV-18)
The Government has a two pronged approach. It has allowed relief to small borrowers by fiscal support for interest on interest. The Kamath Committee recommendations take care of sectoral issues.

Senior Advocate V Giri, appearing for RBI, to SC on October 5: "A large percent of people feel that an interest on interest is hitting them very hard. There are further recommendations to be made, and they will be considered. If you feel the report is to be placed on record, we will do so." (LiveLaw)
Kamath Committee was constituted by the RBI. At the highest level, certain discussions have taken place, even during the hearing of writ petitions. This was also a statutory amendment and for circulars to be issued to the higher institutions.