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The Supreme Court (SC) has pronounced its judgment on a batch of pleas related to the six-month loan moratorium period, stating that it cannot allow waiver of complete interest and extension of the moratorium.
A bench comprising of three judges said judicial review is not possible on economic policy matters.
The SC also lifted the temporary freeze on letting banks classify accounts as non-performing assets (NPAs) after the moratorium has ended.
> Petitioners will not be eligible for waiver of interest on interest, extension of moratorium period, or sector specific reliefs.
> There is no justification for waiving compound interest only on loans of up to Rs 2 crore. There shall be no interest on interest or compensation interest during moratorium period for all borrowers, irrespective of the loan amount. If any such amount has been collected it shall be refunded.
> Justice MR Shah said: "Courts are not advisers to the executive on matters of economic policy. Pandemic affected all sectors and govt had to take measures such as providing transport to migrants, etc. Even govt had no support during Pandemic and even GST loss that was incurred." (Inputs from Bar & Bench)
> Justice MR Shah said: "We have considered reliefs independently. Waiver of complete interest is not possible as banks have to pay interest to account holders and pensioners".
> "What is an economic policy or what will be financial package be will be decided by the Centre and RBI after detailed consultations."
> "From various steps taken by Centre and RBI, it cannot be said that centre has not taken steps in backdrop of COVID-19."
> "Courts are not advisers to the executive on matters of economic policy. Pandemic affected all sectors and govt had to take measures such as providing transport to migrants etc. Even govt had no support during Pandemic and even GST loss that was incurred."
Also read: Analysis | On loan moratorium case, SC offers an 'Aatmanirbhar' interest waiver solution
> The court order said "interim relief granted earlier not to declare the accounts of respective borrowers as NPA stands vacated."
Here's what happened previously:
> The Reserve Bank of India (RBI) had on March 27, 2020 announced a moratorium on loan instalments due between March 1 and May 31. The moratorium period was later extended by three months till August 31, 2020.
> The moratorium was intended to provide borrowers relief during the COVID-19 pandemic, enabling them to defer payments on EMIs.
> The top court had in September 2020 ordered that accounts that were not NPAs as on August 31 should not be classified as NPAs until further orders.
> In October 2020, the central government announced waiver of compound interest charged during the moratorium period on certain categories of loans of up to Rs 2 crore.