Loan Moratorium case: SC defers hearing till 13 October; asks parties to file replies on Centre's affidavit

The Supreme Court today asked all parties to file their replies on the affidavit submitted by the Centre on the loan moratorium issue within a week. The apex court will next hear the case on 13 October 2020. The court also said that the issue related to real estate associations and others should also be heard.  

Not satisfied with their responses, SC noted that no circulars or directives have been issued either by the Centre or the Reserve Bank of India (RBI) on implementation of decisions. It also observed that the Kamath Committee report was also not produced before the court. The SC bench directed the banking regulator to file an affidavit in a week’s time and also include the committee report.  

The top court has sought specific reply from the Centre on the recommendations by Kamat Committee, which have been accepted and also queried, as to "how many of them have been put in the public domain?"

The top court while hearing the matter said that the petitioners have alleged that the Central Government’s affidavit does not mention about implementation of many issues. 

The real estate association Credai went on to say that the data given by Centre in its affidavit were without any basis.  

The SC said that the Centre and RBI should pass clear orders for people to know what benefits they are getting. The next hearing on this case is scheduled on 13 October.  

A bench headed by Justice Ashok Bhushan gave one week to the Centre to file an additional affidavit in the matter clarifying the implementation of the Kamat Committee recommendations.

The bench observed that the Kamat Committee recommendations and follow up action on individual sectors has also not been placed before it.
The bench said "Why was it not placed before us?"

Banks at a loss due to delays 

Senior Counsel Harish Salve who appeared for Indian Banks’ Association (IBA) today said that the banks are incurring losses because of the delays on this matter. He urged the court to adjourn the case only for the purpose of filing replies by the affected parties and this period should not be more than 2-3 days.   

The RBI Counsel V. Giri today argued that people were getting adversely affected due to interest on interest. There should be more suggestions on this and the court must take cognisance of this.  

Relaxations likely on interest on interest: 

The Centre in an affidavit informed the Supreme Court that it has taken a decision to waive "interest on interest" on loans up to Rs 2 crore during the six-month moratorium period.

The categories of loans up to Rs 2 crore include: MSME loans, education loans, housing loans, consumer durable loans, credit card dues, auto loans, personal loans to professional and consumption loans.

The government is planning to give benefits even to those who have not availed the facility of loan moratorium. The Finance Ministry may introduce a cashback facility. The government may also give compensation to those MSMEs who have paid timely EMIs for loans up to Rs 2. The government is planning to do this to reward people who have paid their EMIs on time and bring them at par with those who have availed this scheme.   

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The people who have availed loan moratorium may get relaxation from interest on interest if the SC accepts the government proposal.