SC urges the government to introduce an interest exemption plan at the earliest

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The Supreme Court on Wednesday urged the central government to implement its “interest waiver” decision at the earliest while hearing a series of petitions calling for an interest waiver during the credit moratorium. On October 3, the central government said it would put “interest” on “interest” on loans of up to 2 crore for six months through the end of August. The government’s decision will take effect before November 15, Attorney General Tushar Mehta told the Supreme Court.

“Banks waive interest and are then compensated by the government and the calculation will have different modalities. We have to make sure that the bank gives us an appropriate format,” added Mehta.

The bench of three judges, consisting of Judges Ashok Bhushan, R. Subhash Reddy and MR Shah, said on Wednesday that the government should not delay implementation any further. “Why a month to implement such a small decision … take advantage of government concessions to borrowers up to 2 crore must be wagered asap, “said the bank.

“November 15th is the outer limit for implementation, but the government will try to implement it even earlier,” added Mehta.

In the wake of the coronavirus pandemic in the country, the Reserve Bank of India announced in March a moratorium on the repayment of fixed-term deposits for three months. The central bank later extended the moratorium period to August 31. The aim was to give borrowers more time to process payments from EMIs amid the economic impact of the lockdown, without being classified as non-performing assets (NPAs).

The Supreme Court ruled on September 3 that accounts that were not declared an NPA as of August 31st should not be declared an NPA until further orders are issued. On October 10, the Reserve Bank of India informed the Supreme Court that the suspension of NPA account classification will have a huge impact on the banking system, in addition to undermining RBI’s regulatory mandate.

Senior Advocate Harish Salve, who represents the banking association, stated that the banks are waiting for the RBI circular. The hearing was adjourned to November 2nd. The Supreme Court added: “We will expect the government’s decision to waive interest to be implemented by then. We will review the implementation of the waiver. “

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