Waiver of compound interest on loans: SC asks Centre to file fresh affidavit, says 'people should know what benefit is extended'
New Delhi | Jagran Business Desk: The Supreme Court on Monday said that the Centre's affidavit on waiving "interest on interest" on repayment of loans up to Rs 2 crore during the six-month moratorium period granted in wake of the COVID-19 pandemic, was not satisfactory and asked for a fresh version in a week.
The top court granted the Reserve Bank of India and the Centre a week’s time to file additional affidavits on the issue, adding that it will next hear the matter on October 13.
It also asked the Centre and the RBI to place on record the K V Kamath committee recommendation on debt restructuring due to COVID-19 related stress on various sectors as also the notifications and circulars issued by them so far on the issue of loan moratorium.
In the hearing conducted through video conferencing, the top court took note of the grievances that various sectors such as real estate have been left out under the new proposal by the Centre.
The Kamath panel had made recommendations for 26 sectors that could be factored by lending institutions while finalizing loan resolution plans and had said that banks could adopt a graded approach based on the severity of the coronavirus pandemic in a sector.
The apex court has asked the Centre and the RBI to place before it within a week the recommendations and the decisions and other notifications on loan moratorium and also "consider the issues raised by the real estate associations and the power producers".
Meanwhile, Indian Banks Association (IBA), Confederation of Real Estate Developers Association (CREDAI) and other parties have been granted liberty by the bench to file their responses to the affidavit of the Centre.
Senior advocate C A Sundaram, appearing for the real estate sector, said it has been completely left out which should not have been done "in this kind of scenario".
Another senior lawyer Kapil Sibal said that he wanted to file a detailed affidavit to the Centre's reply as there are certain facts which need to be dealt with and sought time for it.
On Saturday, the Centre had said that it has taken a decision to waive "interest on interest" on repayment of loans up to Rs 2 crore during the six-month moratorium period.
The affidavit said the only solution is that the government should bear the burden resulting from waiver of compound interest, adding that the benefit will remain available to those who were clearing their loan dues between March and August.
It also said it did not waive the interest charged on all categories of loans because that would have made it difficult for banks to survive. The categories of loans up to Rs 2 crore eligible for the waiver include MSME loans, education loans, housing loans, consumer durable loans, credit card dues, auto loans, personal loans to professional and consumption loans.
Posted By: Abhinav Gupta