In a major relief for the common people, the Centre on Tuesday told the Supreme Court that the moratorium period for loans can be extended by two years as per the Reserve Bank of India circular.
Yesterday, the moratorium provided by the central government due to the impact of coronavirus pandemic has come to an end.
Representing the Centre government, the Solicitor General Tushar Mehta urged the court to allow the Centre to discuss the issue with the central bank and the bankers’ association and arrive at a solution on the issue of waiving the “interest on interest” during the loan moratorium period.
“There are more issues involved, GDP is down 23 per cent and the economy is stressed,” he said.
Yesterday, the official data said that the country’s gross domestic product (GDP) has contracted 23.9 per cent in the April-June quarter (Q1). This is the worst incident of the negative economy in India since 1996.
As per the National Statistical Office, Gross Value Added (GVA) came in at -22.8 per cent.
READ: India’s GDP declines sharply by 23.9% for Q1 in FY 2020-21; worst contraction on record
“The lordship may go through it, the matter may be taken up tomorrow or day after tomorrow. The interest on interest part, we have discussed with the RBI officers,” Solicitor General said.
“I am saying with a great sense of responsibility. Harish Salve also spoke with the bankers’ association. Most of the issues are addressed,” he added.
The matter was being heard by the three judges panel.
“We have also to hear the interest in interest part also,” said Justice MR Shah.
The apex court has posted the matter for Wednesday.
Last week, the Supreme Court had sought the Centre’s reply and to make its stand clear on giving moratorium on charging interest on loans as well as interest-on-interest during moratorium period declared during the Coronavirus pandemic.
During a hearing against financial institutions levying interest on loans while the temporary suspension period was on, the top court pulled up the Centre for not taking a stand on waiver of interest on interest during the loan moratorium period.
The apex court observed that it appears the Centre is hiding behind the Reserve Bank of India’s decision on this issue, especially when it has ample powers under Disaster Management Act, where it can take a decision by stopping the banks from charging interest on deferred EMIs and waive interest on interest for a moratorium period.
A bench comprising Justices Ashok Bhushan, R Subhash Reddy and MR Shah had told the Centre that it cannot be interested only in business and not care about the sufferings of people.
READ: ‘All because of lockdown, Govt can’t only focus on business’: SC pulls up Centre on moratorium issue