Loan Moratorium Case: Facing Great Difficulty With Interim NPA Ordinance, RBI Says to SC

The Reserve Bank of India told the Supreme Court on Thursday it faced “great difficulties” with the court’s interim order prohibiting the reporting of fully valid accounts as non-performing assets (NPA) until August 31, 2020.

On September 3, the Supreme Court had, as an interim measure given the difficulties of the pandemic and the moratorium, ordered that “accounts that have not been declared NPA until August 31, 2020 will not be declared NPA until ‘see you again’.

Appearing before a bench led by Judge Ashok Bhushan, RBI lawyer V Giri argued that “the interim order imposed is causing great difficulty for the RBI.” Giri urged the court to hear the RBI on this issue at the next date.

The court closed the case for Nov. 18 as Solicitor General Tushar Mehta, who represents the government and also the RBI, argued in another court at the time.

Principal petitioner satisfied

During the brief hearing, the main applicant, who represented individual borrowers before the Supreme Court, expressed satisfaction with the government’s plan to reimburse the difference between compound and simple interest charged during the moratorium on eight categories of loans. ‘worth up to 2 crore each. .

Senior lawyer Rajiv Dutta, representing individual borrowers and lead petitioner Gajendra Sharma, said: “We are grateful and wish to withdraw the written request. Please save my submission.

The repayment program is intended to provide “extra relief” to borrowers affected by financial distress induced by the pandemic.

“The central government ordered all lending institutions to give effect to the program and credit the amount calculated in accordance with the program to the accounts of borrowers by November 5,” the finance ministry said in a brief affidavit.

All lending institutions will credit the difference between compound interest and simple interest on loans to the respective accounts of eligible borrowers for the period between March 1 and August 31, according to the affidavit.

The program will cover MSMEs, education, housing, consumer durables, credit cards, auto, personal and consumer loans.

Clause three of the waiver regime defines “all financial institutions” to include banking corporations, public sector banks, cooperative banks, regional rural banks, all Indian financial institutions, non-bank financial corporations, financial corporations. Housing finance registered with the RBI, the national housing banks.

The RBI has previously informed the Supreme Court of its advice for banks and financial companies to fully comply with the government’s program to reimburse borrowers’ interest on interest charged on their loans during the six-month moratorium period.

The Union cabinet approved the project on October 21.

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