NEW DELHI: The Supreme Court on Thursday ordered the temporary extension of the moratorium on loans until September 28, ordering banks not to mark any loans as non-performing until further notice. The Supreme Court adjourned the case for the last time, giving the Center, the Reserve Bank of India (RBI) and the banks two weeks to work together and file a concrete response on their position on waiving interest charged during the moratorium period.
The interim order was passed by the Supreme Court headed by Justices Ashok Bhushan and comprising R Subhash Reddy and MR Shah during the hearing of a batch of petitions requesting a waiver of interest or waiver of interest on suspended IMEs. during the extended moratorium period amid the nationwide lockdown due to the covid-19 outbreak.
The Supreme Court will continue hearing the case on September 28.
The panel of three judges took note of the arguments presented by Solicitor General Tushar Mehta, representing the Center. He noted that the government at the highest level was considering all issues in this plea package related to the loan moratorium. The government must, within two weeks, table a concrete response taking into account all sectors.
The order also noted that a committee of experts had been formed to consider all issues and that action will be taken by the government.
The court noted concerns raised by Senior Counsel Harish Salve of the Indian Banking Association (IBA) regarding individual borrowers, outside of other sectors, that individuals would be affected and decisions should be made by the department. of Finance and not just by the RBI.
Senior lawyer Kapil Sibal, representing real estate associations, argued that “the downgrading of borrowers continues. Borrowers must be protected against such downgrading.”
Salve and Mehta opposed the downgrade request and asked for two weeks to resolve this issue. Salve, while asking the bench, said, “Please don’t place downgrade orders today as this is based on many factors. Businesses will suffer. “
“We are inclined to allow two weeks to file the appropriate affidavit. We specify that we will examine the various prayers made by the petitioners at the next date. All decisions made by the RBI, the GOI or the banks must be submitted to the court for review, ”the judiciary said in its order.
On September 3, the court adopted an interim instruction stating that accounts not reported as non-performing assets (NPA) as of August 31 will not be reported as NPA until further notice.
On May 22, the central bank extended the moratorium on term loans until August 31 as part of the nationwide lockdown due to covid-19. In March, the central bank authorized a three-month moratorium on payment of IMEs and other loans on the payment of all term loans due between March 1 and May 31.
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