The Centre on Thursday appealed to the Supreme Court not to intervene and give more relief to borrowers as the government was already dealing with it, reported Bar and Bench. The court is hearing pleas against the Reserve Bank of India’s decision to charge interest on term loans during the moratorium period announced due to the impact of the coronavirus pandemic.
Solicitor General Tushar Mehta told the court that several relief packages and schemes had been worked out with experts and that the court’s intervention in fiscal policy matters would be unnecessary.
“Pandemic-related relief has been extended via Atmanirbhar scheme and sector specific pandemic related relief has already been provided by [the] government,” Mehta told the court of Justices Ashok Bhushan, Subhash Reddy and MR Shah said, according to Live Law. “Rs 90,800 sanction for power distribution companies to pay their outstanding dues already made among other things.”
Mehta also told the court that nearly every sector that had been affected by Covid-19 had been identified. So the submission that there has not been any careful consideration while providing relief was incorrect, he said. “I want to satisfy my Lords’ conscience that whatever the DMA and Central government could do, it has done and there has been application of mind,” the solicitor general added.
Mehta also highlighted that the Kamath Committee had streamlined loan restructuring for those who borrowed a significant amount, and the accounts with lending exposure of under Rs 1,500 crores were covered by the RBI circular. The solicitor general said that this was an instruction imposed upon the banks.
Meanwhile, senior counsel Abhishek Manu Singhvi, appearing for the Power Producers Association, told the Supreme Court that extraordinary situation demanded an intervention under Article 32 (remedies for enforcement of rights conferred) of the Constitution.
The Supreme Court asked the petitioner to put forward suggestions to the RBI and sought the central bank’s reply. The bench then proceeded to dispose of the petitions where petitioners were satisfied with the waiver of compound interest. The hearing in the remaining matters will be taken up next week.
On October 14, the top court refused to allow the Centre a month’s time to implement the interest waiver on loans of up to Rs 2 crore. It directed that the execution of waiver should be done by November 2. The government claimed that the deadline for providing relief to borrowers was November 15.
The Centre had submitted an affidavit to the court on October 9, in which it said that it was not possible to provide more relief to different sectors affected by the coronavirus crisis. The Centre had even then said that “courts should not interfere in fiscal policy”. The Reserve Bank of India had also told the Supreme Court that it was not possible to extend the moratorium beyond six months.
In August, the Centre said the loan moratorium scheme can be extended by a period of two years after the top court had criticised the Centre for “hiding behind the RBI” without making its stand clear on the loan moratorium.
On May 23, it said that banks can extend the moratorium until August 31. However, the RBI had said it would be imprudent to go for a forced waiver of interest, risking the financial viability of the banks it was mandated to regulate and putting the interests of the depositors in jeopardy.
Considering the economic impact of the lockdown imposed to fight the coronavirus crisis, the RBI had on March 27 said that banks would be allowed to grant a moratorium of three months on payment of all installments due between March 1 and May 31.