Moratorium: Govt gets a week more to finalise plan on waiver of interest charged on deferred loan EMIs

The Supreme Court on Monday gave one more week to the government to come up with a plan on waiver of interest charged on deferred loan EMIs during the moratorium period to ease the financial burden on borrowers. A Bench led by Justice Ashok Bhushan adjourned the matter till October 5 after Solicitor General Tushar Mehta said the issues were under “active consideration” of the government and a decision is likely to be taken within 2-3 days. “Some things are beyond my control,” Mehta told the Bench.

While granting the government time till Thursday, Justice Bhushan said: “The SG states that he shall endeavour to circulate affidavit by Thursday so that decision taken by the government may be intimated to the counsel and can be heard on Monday. Interim orders to continue.”

The top court had on September 10 extended its interim order that asked banks not to declare any loans as NPAs till further orders. It had given a “last chance” to the government and RBI to come up with a concrete plan on the waiver of interest issue. It had also asked the government to take a decision after considering the interests of all classes of creditors and all the sectors of the economy. On September 3, the SC had directed banks against declaring loan accounts that were not NPAs prior to August 31.

The Bench had observed that “banks, the government cannot call borrowers hoping for relief as adversarial. We are giving time to the Centre, but take a concrete decision. All decisions taken by the GoI, RBI, or the different banks should be placed before the court for consideration…on the next date of hearing, the specific instructions with regard to charging of compound interest and credit rating/downgrading during moratorium period shall be obtained…”

Mehta had then assured the judges that the government was considering all the issues at the highest level and is in discussions with banks and other stakeholders to work out a “holistic” solution aimed at revival of the economy.

Meetings have taken place and concerns are being examined, but the government needs another two weeks to file a concrete response considering all the sectors, he had said, adding that an expert committee had been constituted to look into the issues.

The Supreme Court is hearing a batch of petitions seeking a waiver of interest on deferred EMIs during the extended moratorium period amid the nationwide lockdown due to the Covid-19 pandemic.