Extension of moratorium on loans: Remaining term of loan can be extended by 2 years, government told SC | Business News in India
In an affidavit filed in response to criticism from the SC that the Center was not clarifying its position and was trying to hide behind the RBI, the Ministry of Finance took a position similar to that of the central bank and said that interests did not could not be canceled as it negatively affected 197 crore depositors, most of whom depended on interest earned on money placed in banks. “Any moratorium is transitory in nature and must end someday. Thus, the best interests of the economic health of the country, as well as that of the respective borrowers, would be better served by paving the way for a more sustainable long-term debt restructuring solution, ”the ministry said.
SG Tushar Mehta informed a bench of Judges Ashok Bhushan, RS Reddy and MR Shah on Tuesday that the Center, RBI and the Banking Association are working together to identify troubled sectors and assess the varying impact of the slowdown to design the sector. specific financial relief instead of a “one size fits all” mechanism.
The bench said a bunch of individual and industry PILs asking for a waiver of interest on the principal amount during the moratorium period, or a lease waiver of interest on accrued interest during the six-month period. months, would be heard on Wednesday. “This will be the only case we hear on Wednesday,” he told the SG, indicating that no further adjournments would be granted.
The finance ministry said the RBI circular of August 6 provided a framework for fully empowering banks “to address Covid-19 stress and tailor relief to individual borrowers through the granting of various concessions in terms of interest rate modification and discount on the amount payable as interest; extension of the residual term of the loan, with or without moratorium, up to two years; waiver of interest and penalty charges; reschedule repayment; converting the accrued interest into a new loan with a deferred payment schedule; and, sanctioning an additional loan “.