Government’s payback scheme on interest is arbitrary, Industry tells Supreme Court

New Delhi, December 2: Industry and business sectors complained to the Supreme Court on Wednesday that the government’s decision to restrict its payback scheme to “small” borrowers covering only eight categories of loans, worth up to ₹2 crore, was “arbitrary.”

A Bench led by Justice Ashok Bhushan was hearing a host of pleas from various sectors for similar financial relief to help them overcome the stress caused by the pandemic and lockdown, The Hindu reported.

One of them even sought an extension of the moratorium till March 31, 2021.

So far, the payback scheme covers only MSME, education, housing, consumer durables, credit card, auto, personal and consumption loans. Under this scheme, lenders have already returned over ₹4,300 crore as the difference in the compound interest and simple interest charged between March 1 and August 31 (moratorium period). Ex-gratia payments had been made into 13.12 crore bank account as of November 13, the Supreme Court had noted from the government’s submission in a judgment on November 27.

However, industrial and business sectors, classified as “big” borrowers, have been seeking industry-specific relief rather than being left to the mercy of individual lending institutions.

Senior advocate Kapil Sibal, for CREDAI, highlighted the need for the government and the Reserve Bank of India to understand the specific problems faced by each industry during the pandemic.

Observing that some sectors such as pharma and digital platforms had done well during the lockdown, Mr. Sibal said others such as real estate and retail were in the doldrums. Equating such distressed sectors with others which had “prospered” in the past few months of crisis would be a violation of Article 14 of the Constitution.

The Shopping Centres Association of India said retail businesses and malls had seen an almost complete shutdown. Footfalls in malls were below 10%.

The lawyers said government could not leave it to the subjective discretion of individual banks to carve relief for various sectors. The hearing will continue on December 3.

https://www.thehindu.com/news/national/industry-tells-sc-govts-payback-scheme-on-interest-is-arbitrary/article33234284.ece