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Loan Moratorium : Implement Decision To Waive Interest For 8 Specified Loan Categories, Supreme Court Directs Centre

Mehal Jain
28 Nov 2020 3:33 AM GMT
Loan Moratorium : Implement Decision To Waive Interest For 8 Specified Loan Categories, Supreme Court Directs Centre
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The Supreme Court on Friday directed the government to ensure that all steps be taken to implement its decision to forego interest on eight specified categories of loans paid upto Rs two crore in view of the coronavirus pandemic.The bench of Justices Ashok Bhushan, R. Subhash Reddy, and M. R. Shah was disposing of a batch of writ petitions which sought for waiver of interest during the...

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The Supreme Court on Friday directed the government to ensure that all steps be taken to implement its decision to forego interest on eight specified categories of loans paid upto Rs two crore in view of the coronavirus pandemic.

The bench of Justices Ashok Bhushan, R. Subhash Reddy, and M. R. Shah was disposing of a batch of writ petitions which sought for waiver of interest during the loan moratorium period allowed by the Reserve Bank of Indian from March 1 to August 31.
The bench noted that in the affidavit dated 23.10.2020 filed on behalf of the Union of India, the following has been stated:-
"The Central Government took many Policy decisions for granting various reliefs for the Covid pandemic which is a 'disaster' within the meaning of the Disaster Management Act, including a policy decision whereby the following borrowers were declared eligible for the benefit of waiver of 'interest on interest':
(i) MSME loans up to Rs. 2 crore
(ii) Education loans up to Rs. 2 crore
(iii) Housing loans up to Rs. 2 crore
(iv) Consumer durable loans up to Rs. 2 crore
(v) Credit card dues up to Rs. 2 crore
(vi) Automobile loans up to Rs. 2 crore
(vii) Personal loans to professionals up to Rs. 2 crore
(viii) Consumption loans up to Rs. 2 crore
"The case of the present petitioner, who has taken housing loan is fully covered by the decisions of the Union of India as noted above, since the benefit has been extended to the housing loan upto Rs.2 Crores, i.e., in pursuance of the aforesaid decisions of the Government of India, the Ministry of Finance had issued order dated 23.10.2020 – Operational Guidelines with regard to COVID-19 Reliefs, details of order dated 23.10.2020 contains a heading "COVID-19 Relief", observed the bench. The bench noted that the Scheme provides for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020). Borrowers in the above segments/classes of loans, who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs. 2 crores [aggregate of all facilities with lending institutions] as on 29.2.2020, shall be eligible under the Scheme.
"Shri Rajiv Dutta, learned senior counsel for the petitioner has expressed its satisfaction on the measures taken by the Government of India redressing grievances of the petitioner to the extent as noted above. The Union of India having taken specific measures vide its circular dated 23.10.2020, which has been brought on the record and follow-up measures have also been taken in consequence thereof, we dispose of the present writ petition with directions to the respondents to ensure that all steps be taken to implement the decision dated 23.10.2020 of the Government of India, Ministry of Finance so that benefit as contemplated by the Government of India percolates to those for whom the financial benefits have been envisaged and extended", directed the bench.

Compound Interest During Moratorium Period Can Be Waived For MSME & Personal Loans Up to Rs. 2 Crore: Centre Tells SC [Read Affidavit]

The bench noted that the pandemic COVID-19 has not only caused serious threat to the health of the people but has also cast its shadow on the economic growth of the country as well as other countries in the entire world.
"Due to lockdown imposed by the Government of India in exercise of powers under the Disaster Management Act, 2005, there can be no denial that most of the businesses including private sector as well as public sector has been adversely affected. For several months, large number of industries were not allowed to function and exemptions were granted only to few of the industries to run and carry on its activities, which were found essential and necessary in the fact situation. Although, gradually, due to Unlock- 1, 2 and 3, the industries and other business activities have been restored and the economy of the country is on track although at a slow pace", reflected the bench. It appreciated that the moratorium period as granted by the Reserve Bank of India vide orders dated 27.03.2020 and 23.05.2020 have continued from 01.03.2020 to 31.08.2020, i.e., for the period of six months.
"As submitted by the learned Solicitor General and reflected by the affidavits filed on behalf of the Union of India, it is clear that Central Government was fully conscious of the difficulties faced by the various sectors and the stakeholders of various sectors and different measures by Finance Ministry have been taken in the above reference, which has been detailed in the affidavits dated 31.08.2020, 09.10.2020 and 23.10.2020", recorded the bench.
The bench noted that the decision of the Government of India dated 23.10.2020 has also been communicated to all the banks and other financial institutions. The Reserve Bank of India has also issued necessary instructions in the above regard. In the affidavit filed on 17.11.2020 on behalf of the Union of India, it has been stated:-
"It is submitted that as a follow-up towards the implementation of the aforesaid Scheme, the nodal agency, i.e. State Bank of India, has informed that as on 13.11.2020, as per provisional, unaudited information received so far from various lending institutions, such lending institutions have released ex-gratia amount of an aggregate exceeding Rs. 4,300 crore in over 13.12 crore accounts of borrowers covered under the said Scheme".
The RBI told the Supreme Court that it has advised the banks to credit to the borrowers the difference between compound interest and simple interest for the six month moratorium period to the borrowers of specified categories.
[Read Judgment]



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