You are here: Home » Finance » News » Banks
Business Standard

Loan moratorium: RBI urges SC to lift order banning declaration of NPAs

The RBI urged the Supreme Court to lift its interim order, which held that accounts not declared as non-performing assets till August 31 this year are not to be declared NPAs till further orders

Topics
Reserve Bank of India | Non performing assets | Moratorium

Press Trust of India  |  New Delhi 

Photo: Bloomberg
Photo: Bloomberg

The RBI Thursday urged the to lift its interim order, which held that accounts not declared as non-performing assets till August 31 this year are not to be declared NPAs till further orders, saying it is facing difficulty due to the directive.

In a relief to stressed borrowers who are facing hardships due to the impact of COVID-19 pandemic, the apex court had passed the interim order on September 3.

The counsel appearing for the (RBI) told this to a bench headed by Justice Ashok Bhushan which was hearing a batch of pleas relating to charging of interest on interest by on EMIs, which were not paid by the borrowers who availed of the loan scheme in view of the pandemic.

We are facing difficulty due to order banning declaring of NPAs, senior advocate V Giri, appearing for RBI, told the bench while requesting it to lift the interim order.

The RBI and the Ministry have already filed separate additional affidavits in the top court saying that the banks, financial and non-banking financial institutions will credit into the accounts of eligible borrowers by November 5 the difference between compound and simple interest collected on of up to Rs 2 crore during the scheme period.

Senior advocate Rajiv Dutta, appearing for one of the petitioners, told the bench that they are grateful to the Centre and the RBI for hand-holding small borrowers and said that his plea be disposed of.

The counsel appearing for the Centre said that Solicitor General Tushar Mehta, who has to argue in the matter, was on his legs before a special bench of the apex court in another case.

Senior advocate A M Singhvi, appearing for one of the applicants, said that power sector needed to be heard.

The bench said that it would take up the matter for hearing on November 18.

The pleas pertained to charging of interest on interest by on EMIs which have not been paid by borrowers after availing the loan scheme of RBI during March 1 to August 31.

Earlier, the RBI had filed the affidavit saying that it has asked all banks, financial and non-banking financial institutions to take "necessary actions" to credit into the accounts of eligible borrowers the difference between compound and simple interest collected on of up to Rs 2 crore during the moratorium scheme.

Prior to this, the central government had told the apex court that lenders have been asked to credit into the accounts of eligible borrowers the difference between compound and simple interest collected on of up to Rs 2 crore during the RBI's loan moratorium scheme by November 5.

The government had said that the ministry has issued a scheme as per which lending institutions would credit this amount in the accounts of borrowers for the six-month loan moratorium period which was announced following the COVID-19 pandemic situation.

On October 14, the apex court had observed that the Centre should implement "as soon as possible" the interest waiver on loans of up to Rs 2 crore under the RBI's moratorium scheme and had said that the common man's Diwali is in the government's hands.

The RBI had on March 27 issued the circular which allowed lending institutions to grant a moratorium on payment of instalments of term loans falling due between March 1, 2020, and May 31, 2020, due to the pandemic. Later, the moratorium was extended till August 31 this year.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, November 05 2020. 13:11 IST
RECOMMENDED FOR YOU
.