Moratorium: Supreme Court breather for distressed debtors


Satya Prakash
Tribune News Service
New Delhi September 3

The Supreme Court on Thursday ordered banks to not declare any mortgage account non-performing asset (NPA) if it was not so on August 31 when the mortgage compensation moratorium scheme introduced by the RBI ended.

“The accounts which were not declared NPA till August 31, 2020 shall not be declared NPA till further orders,” a three-judge Bench led by Justice Ashok Bhushan stated in an interim order.

The court docket issued the order after Harish Salve, representing the Indian Banks’ Association, submitted that no account shall turn out to be NPA at the very least for a interval of two months. The order protects these accounts from being declared as NPAs which weren’t NPAs as on August 31.

The safety from being declared NPA for such accounts will proceed until the petitions in search of curiosity waiver on loans throughout Covid lockdown had been disposed of, it stated posting the matter for additional listening to on September 10.

While passing the interim order, the Bench, which additionally included Justice R Subhash Reddy and Justice MR Shah, famous that debtors wanted to be protected. Solicitor General Tushar Mehta, representing the Centre, tried to persuade the court docket as to why curiosity needs to be saved alive so as to save banks.

Mehta stated banks had been free to cope with debtors and supply them options relying upon their particular issues and wishes. A one-size-fits-all answer can’t be granted as a result of distinction in difficulties confronted by completely different classes of debtors, he stated. However, the Bench stated the RBI wanted to difficulty sure directives to cope with the scenario.

“What you do, that’s for you to decide. Certain things have to be decided by the Government of India and the RBI. Everything can’t be left to the banks,” the highest court docket stated.

During Thursday’s listening to, the Bench made it clear that it was primarily contemplating two points — if banks needs to be charging curiosity on curiosity and if the National Disaster Management Authority underneath the Disaster Management Act can present aid with regard to mortgage compensation in catastrophe conditions.

Announced by RBI in March for 3 months, the mortgage moratorium is a authorized authorisation to debtors to postpone cost of EMIs. It was later prolonged to 6 months until August 31, 2020.

The RBI and Centre maintained {that a} full curiosity waiver was not potential as banks too needed to pay curiosity to depositors. It had stated pressured waiver of curiosity would jeopardise the monetary well being of banks.



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