The Supreme Court hearing regarding the loan moratorium or interest relief will continue on December 14. A bench of Judges Ashok Bhushan, RS Reddy and MR Shah hears the case.
The Center informed the Chamber that while considering waiving interest on all loans and advances to all categories of borrowers for the semester moratorium period announced by RBI in view of the COVID-19 pandemic, then the amount lost would be greater than Rs 6 lakh crore.
If banks were to bear this burden, it would necessarily wipe out a substantial and major part of their net worth, rendering most lenders unsustainable and raising a very serious question mark as to their very survival, he said.
The judiciary was informed by Solicitor General Tushar Mehta, appearing for the Center, that this was one of the main reasons why waiver of interest was not even being considered and only the payment of installments was deferred. The highest court is hearing a batch of pleadings from various organizations, including real estate and power, seeking sectoral relief given the COVID-19 pandemic.
Mehta said that while it may not be possible to give the exact percentage of borrowers who failed to take advantage of the moratorium and made payments on time; about such a class would be greater than 50 percent.
Mehta said that by providing relief to troubled small borrowers, the Center decided that relief on the waiver of compound interest during the six-month moratorium period will be limited to the most vulnerable category of borrowers who have received a loan of up to Rs 2 crore.
The RBI announced in March a moratorium on the repayment of term deposits for three months, which was then extended until August 31. The move was to give borrowers more time to clear IME payments amid the economic fallout from the foreclosure, without being filed. as postcode.
However, under the RBI Circular, interest payable during the three-month moratorium period would be in addition to loan maturities that fall after the prescribed period. It is this charge of interest which is disputed in the plea.