Supreme Court allows Centre one more week to submit loan moratorium plan

The court allowed one more week to the government which said it is at an "advanced stage" of discussion and will be ready with a plan in 2-3 days, the reports said.

A three-judge bench of Supreme Court was hearing a string of petitions, seeking a waiver of interest on EMIs deferred during the moratorium period.

The apex court which had asked the government to submit a plan by September 28, deferred the deadline to October 5, after Centre sought some more time, added reports.

“I assure you that it is under consideration and it is at a very advanced stage,” Solicitor General Tushar Mehta, representing the centre and the RBI in the case, told the Supreme Court, reported NDTV.

“The decision on the matter is likely in 2-3 days and will be emailed to the appearing counsel by October 1,” he told the Supeme Court bench.

The Supreme Court had earlier this month ordered that the loan accounts of the borrowers who availed the moratorium or a delay in loan repayment will not be declared bad loans till further order.

It had ruled that the borrowers need to be protected and the banks cannot take coercive action against them.

In its September 10 ruling, the apex court had told the government to submit a detailed plan of the compound interest to be effective and any consequent impact on the borrowers’ credit rating, stating that the plan must be produced in the September 28 hearing.

An expert panel, under former Comptroller and Auditor General (CAG) Rajiv Mehrishi, was set up to study and analyse the issue of interest being charged by banks on instalments deferred during the moratorium period, granted by the Reserve Bank of India in March, initially for three months, and later extended to August 31.

The petitioners have sought relief from interest on interest (interest for opting the suspension of EMIs due to COVID-19 induced economic crisis);however, the RBI and the government are of the view that writing off interest will hit the banks adversely and affect economic conditions.

The RBI and the Centre had told the Supreme Court that loan moratorium could be extended by up to two years amid the coronavirus pandemic which has badly bruised the Indian economy with days of prolonged lockdown and impaired economic activity.