Loan moratorium: SC 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 reimbursement moratorium scheme introduced by the RBI ended.

“Accounts not declared NPA as on August 31 shall not be declared NPA for two months,” a three-judge Bench led by Justice Ashok Bhushan mentioned in an interim order.

The order protects these accounts from being declared as NPAs which weren’t NPA’s as on August 31.

The safety from being declared NPAs for such accounts will proceed until the petitions in search of curiosity waiver on loans throughout COVID19 lockdown have been disposed of, it mentioned 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.

The order got here after Solicitor General Tushar Mehta and senior advocate Harish Salve, representing the Centre and Indian Banks’ Association respectively, tried to persuade the courtroom as to why curiosity must be stored alive so as to save banks.

Mehta mentioned banks have been free to take care of debtors and supply them options relying upon their particular issues and wishes. A one-size-fits-all answer can’t be granted owing to the distinction in difficulties confronted by completely different classes of debtors, he mentioned.

However, the Bench mentioned the RBI wanted to concern sure directives to take care of the state of affairs.

“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 courtroom mentioned.

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

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

The RBI and Centre maintained {that a} full curiosity waiver was not doable as banks too needed to pay curiosity to depositors. RBI had mentioned pressured waiver of curiosity on time period loans would jeopardise the monetary well being of banks and would additionally hurt debtors’ pursuits.

Amid uncertainty over mortgage reimbursement moratorium scheme that ended on August 31, the Centre and RBI had advised the courtroom on Tuesday that it was able to being prolonged as much as two years in view of COVID19. However, no formal choice had been taken on this regard.

The high courtroom — which is seized of petitions demanding waiver of curiosity, or waiver of curiosity on curiosity on the suspended EMIs throughout moratorium — had earlier commented that there was no level in charging curiosity on curiosity.

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