The Centre on Tuesday, 1 September, informed the Supreme Court that the moratorium on repayment of loans is extendable by up to two years, in accordance with an RBI circular.
The Reserve Bank of India had earlier allowed banks and other financial institutions to offer a moratorium to all existing individual and corporate term loan borrowers for six months, until 31 August.
Appearing for the RBI and the central government, Solicitor General Tushar Mehta contended before a bench headed by Justice Ashok Bhushan that the Centre is in the process of identifying the distressed sectors to decide what kind of relief could be provided, as per the impact of the hit they have taken.
Mehta clarified that moratorium is capable of being extended as per the circular.
He also informed the top court that the Centre has filed its reply on the powers under Disaster Management Act, and urged the court to allow Centre, RBI, bankers associations to sit together.
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The bench replied that it has been hearing about this meeting since past three hearings on the matter. Mehta submitted that they will identify the class of borrowers.
The bench said it wanted something concrete on the issue. Mehta reiterated that the moratorium period is anyway extendable by two years.
Justice MR Shah, one of the judges in the bench said, “We also have to hear the interest part”. The Supreme Court had last week wanted to know the government’s stand on waiving interest on loan repayments during the moratorium and said it cannot “hide behind the RBI”. The matter has been posted for Wednesday as the top court did not get the affidavit by the Centre stating its stand.
The RBI had earlier informed the court about not having any interest waiver during the moratorium on repayments of term loans so as to avoid putting the banks’ financial health and stability at risk.
(With inputs from IANS)
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