SC on Loan Moratorium LIVE updates: The Supreme Court bench has adjourned the case hearing to November 5 to accommodate the Solicitor General Tushar Mehta who is unavailable as he has to appear in the pleas challenging the construction of the new Grand Vista in Delhi. The Reserve Bank of India (RBI) had granted borrowers a six-month loan moratorium, letting them defer payments on loans and easy monthly installments (EMIs) during the COVID-19 pandemic. The central government has agreed to waive compound interest on medium, small and micro enterprises' (MSME) loans and some individual loans of up to Rs 2 crore. The RBI filed an affidavit in the Supreme Court (SC) stating that banks and non-banking finance companies (NBFCs) have to repay the 'interest on interest' amount collected on loans up to Rs 2 crore during the loan moratorium period by November 5. Catch the latest updates here:
SC on Loan Moratorium LIVE Updates |
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.
SC on Loan Moratorium Updates | The case so far
>> 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 Updates | Full proceedings on October 14
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
JUST IN |
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)
SC on Loan Moratorium Updates | 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)
Loan moratorium: SC allows Centre to waive interest on interest, asks for action plan; here's what RBI said in court
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
SC on Loan Moratorium Updates | 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. Read more here
SC on Loan Moratorium Updates | 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 Updates |
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 on Loan Moratorium Updates | Full proceedings on October 5
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
SC on Loan Moratorium Updates | The case so far
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.
SC on Loan Moratorium Updates |
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.
SC on Loan Moratorium Updates |
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.
SC on Loan Moratorium Updates | Proceedings on October 5:
> Solicitor General Tushar Mehta to SC: There is nothing to hide (with regard to the Kamath Committee report), we will put the report on record.
> Senior Advocate Aryama Sundaram to SC: The Centre's affidavit "eliminates the real estate sector from consideration and the affidavit does not touch us (real estate industry) at all".
> Senior Advocate Kapil Sibal to SC: The issues are far graver, because as on September 1, all our accounts are "non-standard". (Bar & Bench)
SC on Loan Moratorium Updates | Apex Court's observations on October 5:
> The Centre's affidavit does not say what has been done with respect to the Kamath Committee report. (Inputs from legal news website Bar & Bench)
> The issue is not about placing report on record but about implementing the report. The Centre and the RBI should make certain orders so that people know what benefit is extended.
> Petitioners argue that many issues have not been dealt with in Centre's affidavit. The Kamath Committee report has not been brought on record.
> No consequential orders or circulars have been issued by the government or the RBI for enforcement of the decisions.
> Grants time to RBI, Centre to file additional affidavits. The court also asks to also consider the issues raised by the real estate associations such as CREDAI and power producers.
SC on Loan Moratorium Updates |
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 which are likely be addressed today.
SC on Loan Moratorium Updates |
The Supreme Court on October 14 djourned 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 three judge bench comprising of Justices Ashok Bhushan, R Subhash Reddy & MR Shah will be hearing the case.
Hello and welcome to Moneycontrol's LIVE coverage of the Supreme Court hearing of petitions seeking complete interest waiver during the six-month loan moratorium period. A bench led by Justice Ashok Bhushan will continue hearing the pleas today.
Stay tuned to this LIVE blog for the latest new and updates.
