Credit moratorium | Interest on Interest “worse than taking a pound of meat”

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August 6 RBI circulars are heavily criticized by individual commercial borrowers in the Supreme Court.

Circulars issued on August 6th by the Reserve Bank of India (RBI) and celebrated by the government in the Supreme Court have been heavily criticized by individual borrowers and commercial sectors across the spectrum for turning it “old wine into new.” Bottle “called.

The circulars allow individual banks, at their own discretion, to resolve COVID-19-related stress and adapt the relief to individual borrowers faced with the reality of paying accrued loan interest after the moratorium period.

Loan Moratorium Program | Supreme Court strikes in the center

Rajiv Dutta appeared before a bank led by Judge Ashok Bhushan on Wednesday and said it was “worse than taking a pound of meat asking borrowers to pay interest on interest incurred during the August 31 moratorium has expired, have accrued “.

“I [borrowers] the loans are not in default. The moratorium on EMI was intended as a breathing space when cash flow is tight. How can the banks say it is a loss for them? When the country is Down Under, do the banks want to make a profit? It’s worse than taking a pound of meat. Profit from COVID? Give me time to get my finances back, stand on my feet, ”claimed Mr Dutta, who appeared for the borrower community.

Mr Dutta said the RBI was “not an agent of the banks, just a regulator”.

Nerve center of the economy

Senior power and real estate lawyer KV Vishwanathan said the government and RBI would go around in circles without addressing the proportionality and waiver of interests required in an “exceptional force majeure situation” like the pandemic. He said the sectors he represents are the nerve center of the economy. The moratorium only postponed the burden.

Senior Advocate Ranjit Kumar of the Shopping Centers Association of India asked if the computerized banking system had already granted the credit accounts to NPAs when the moratorium expired on August 31.

The senior advocate Kapil Sibal for the construction sector called for a complete interest waiver for the moratorium period.

Attorney General Tushar Mehta, for both the center and RBI, said a variety of banks are dealing with a variety of loans and borrowers. It’s about revitalizing the economy and sectors. He said the majority of the economy is run by small businesses.

The court will continue the hearing on Thursday.

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