The Supreme Court on Tuesday adjourned the hearing on petitions seeking extension of loan moratorium period and waiver of interest on interest to October 14. The 3-bench of Justices Ashok Bhushan, R Subhash Reddy and M R Shah was scheduled to continue with its hearing of a batch of petitions today. However, the case was adjourned since Justice Ashok Bhushan was required to sit in a different combination of Judges in the post lunch session.
The Centre has already opposed any further interest waiver for any specific category of borrowers. It has told the top court that going any further than the fiscal policy decisions already taken, such as waiver of compound interest charged on loans of up to Rs 2 crore for six months moratorium period, may be "detrimental" to the overall economic scenario, the national economy, and banks may not take "inevitable financial constraints".
The government had also said that the questions of financial stress management cannot be decided judicially.
Earlier, the Centre had told the top court that it has decided to waive compound interest (interest on interest) charged on loans of up to Rs 2 crores for a six-month moratorium period announced due to the COVID-19 pandemic from individual borrowers in eight categories - MSME, Education loan,
Housing Loan, consumer durable loan, credit card dues, auto loan, personal loans to professionals and consumption loans.
The SC, on October 5, had observed that the Centre's affidavit did not contain necessary details and had asked the Centre and the RBI to file fresh ones in the case. It had asked both the Centre and the Reserve Bank of India (RBI) to place on record the KV Kamath committee recommendation on debt restructuring due to coronavirus related stress on various sectors.
Meanwhile, the RBI had also told the Supreme Court a moratorium exceeding six months might destroy the overall credit discipline and have a "debilitating impact" on the credit creation process.