SC seeks reply of Centre, RBI on plea of CREDAI on loan moratorium

The Supreme Court Friday issued notices to the Centre and the RBI on a plea of CREDAI on whether real estate firms are eligible for loan moratorium policy of the central bank.

A bench comprising Justices L Nageswara Rao, S K Kaul and B R Gavai sought response of the Reserve Bank of India and others on the plea of Confederation of Real Estate Developers' Associations of India (CREDAI) alleging that there was no clarity as to whether real estate developers are entitled to loan moratorium policy or not.

Senior advocate Harish Salve, appearing for the association, said that the main issue was as to what happened with the RBI circular and its applicability on real estate developers.

It was told that the circular was binding on the banks but some of the bank's are not expending the loan moratorium benefits to real estate developers, he said.

He said the RBI should clarify this.

Solicitor General Tushar Mehta, appearing for the Centre and others, said he would seek instructions from the ministry concerned and other authorities and get back to the court.

The court then issued the notice and fixed the plea for hearing after two weeks.

Earlier, the top court had asked RBI to ensure that its circular on three-month moratorium on loan repayment between March 1 and May 31 is implemented in letter and spirit as it appeared that the banks were not extending the benefit to the borrowers. The order was passed on other similar pleas.

On March 27, RBI had issued slew of measures to check financial impact of the nationwide lockdown and had issued a circular giving liberty to all banks and financial institution to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, subject to the borrower making such a request.

It had said that repayment schedule for such loans as also the residual tenor would be shifted across the board by three months after the moratorium period.

Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period, the RBI had said.