New Delhi, October 14: The Supreme Court on Wednesday asked the central government to implement its decision to waive “interest on interest” at the earliest while hearing a batch of petitions seeking interest waiver during the loan moratorium.
On October 3, the central government said it will ‘interest on interest’ on loans of up to ₹2 crore for six months through to the end of August. The government’s decision would come into effect before November 15, Solicitor General Tushar Mehta told the apex court.
“Banks will waive interest on interest and then will be compensated by govt and the calculation will have different modalities. We will have to ensure that bank gives us a proper format,” Mehta added, as reported by Livemint.
The three judge bench comprising of Justices Ashok Bhushan, R Subhash Reddy & MR Shah on Wednesday said the government must not delay the implementation any further. “Why one-month time to implement such a small decision….Benefits of government’s concessions to borrowers up to ₹2 crore must be implemented as soon as possible,” the bench said.
“November 15 is the outer limit for implementation but the government will try to implement it even earlier than that,” Mehta added.
In the wake of coronavirus pandemic in the country, the Reserve Bank of India had in March announced a moratorium on repayment of term deposits for three months. The central bank later extended the moratorium period till August 31. The aim was to give borrowers more time to clear payments of EMIs amid the economic fallout of the lockdown, without being classified as non-performing assets (NPAs).
The top court on 3 September said that accounts not declared NPA as on 31 August shall not be declared as NPAs till further orders. On 10 October, the Reserve Bank of India on informed Supreme court that if the stay on NPA account classification is not lifted immediately, it shall have huge implications for the banking system, apart from undermining the regulatory mandate of the RBI.
Senior Advocate Harish Salve, representing the banks association, explained that banks await the RBI circular. The hearing was adjourned to 2 November. The apex court added “We will expect the implementation of governments decision on interest waiver by then. We will review the implementation of the waiver.”