The centre on October 9 informed the Supreme Court that ‘it’s not possible to give more relief to different sectors’ amid the ongoing COVID-19 pandemic, adding that the ‘courts should not interfere in fiscal policy’.
The government’s response came days after the apex court had said that the centre’s last week’s affidavit on waiving ‘interest on interest’ on loans of up to ₹ 2 crore – frozen by the Reserve Bank of India (RBI) in a six-month moratorium granted because of the pandemic – was ‘not satisfactory’.
In its latest affidavit, the centre has stated: ‘Policy is the domain of the government and court should not go into sector-specific financial relief. Any further relief, besides waiving of compound interest for loans up to ₹ 2 crore, is detrimental to the national economy and banking sector.’
Last week, the government informed the SC that it was ready to waive interest on the repayment of loans of up to ₹ 2 crore. The interest waiver is applicable for loans taken by MSMEs (Micro, Small and Medium Enterprises), for educational, housing, consumer goods and auto loans and for credit card dues.
On Monday, however, the court stated the centre’s affidavit was not satisfactory and asked for a do-over in a week.
While hearing petitions on a waiver of interest on deferred EMIs to help small borrowers during the pandemic, the top court said the centre’s affidavit ‘fails to deal with several issues raised by petitioners’.
The centre was also asked to consider the grievances of the real estate and power producers in fresh affidavits. In the fresh affidavit, however, the centre claimed that ‘relief for specific sectors cannot be demanded through petitions’.
‘Only solution is lending institutions and their borrowers formulate restructuring plans… and centre, and RBI cannot interfere,’ the affidavit reads, which further adds that ‘as per Kamat Committee report it is it is not possible to arrive at one particular formula for sector specific relief to deal with pandemic’.
Banks will have to implement the compound interest waiver within one month from the date of notification, the centre has said.
Meanwhile, the central bank has told the apex court the ‘extension of loan moratorium should be left to banks to decide as per policy’. ‘Longer moratorium can raise risk of delinquencies after scheduled payments resume,’ the bank said in a separate affidavit.
