Higher court clears center to submit loan moratorium plan on October 5


The Supreme Court today granted the government one more week to propose a loan moratorium plan to ease the financial burden on borrowers during the coronavirus crisis. The highest court, which asked the government to submit its plan on September 28, postponed the hearing to October 5 after the government asked for more time. The government, however, said talks were at an “advanced stage” and that its plan would be ready in 2-3 days. The bench of three Supreme Court judges heard a series of motions asking for a waiver of interest on deferred IMEs during the moratorium period, which was introduced by the Reserve Bank of India (RBI) to ease the burden on existing borrowers following the coronavirus pandemic-related restrictions.

Here are 10 things to know about this story:

  1. “I assure you that it is under consideration and that it is at a very advanced stage,” Solicitor General Tushar Mehta, representing the center and the RBI in the case, told the Supreme Court, asking for more time. to submit the government plan.

  2. The decision on the case is likely in 2-3 days and will be emailed to the attorney appearing by October 1, he told the highest court.

  3. In its order of September 10, the Supreme Court ordered the government to submit the plan detailing the compound interest to be charged and any resulting impact on borrowers’ credit rating, stating that the plan must be presented at the hearing on the 28th. September.

  4. The center set up a group of experts, under the leadership of former Controller and Auditor General (CAG) Rajiv Mehrishi, to examine the issue of interest charged by banks on deferred payments during the moratorium period due of the COVID-19 pandemic.

  5. In some relief for stressed borrowers, the Supreme Court ruled earlier this month that the loan accounts of borrowers benefiting from the moratorium – or a delay in repaying loans – would not be declared as bad loans until. ‘See you again.

  6. Borrowers must be protected and banks must not take any coercive action against them, said the highest court.

  7. A number of associations representing sectors such as banks and real estate developers are part of the hearings.

  8. As the petitioners seek a waiver of interest on interest (interest for exercising the option to suspend IMEs due to COVID-19), the government believes that the interest write-off will weaken banks and affect economic conditions.

  9. The center and the Reserve Bank of India told the highest court that the loan moratorium could be extended for up to two years due to the coronavirus situation.

  10. The Reserve Bank of India (RBI) in March granted a three-month loan moratorium due to the pandemic-induced situation, and then extended it until August 31 in May.

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