The government, in its latest affidavit, said: “Policy is the domain of the government and court should not go into sector-specific financial relief.”
On Friday, centre informed the apex court that “it’s not possible to give more relief to different sectors” in the midst of coronavirus pandemic, stressing that the “courts should not interfere in fiscal policy”. The court had earlier said the government’s last week’s affidavit on waiving “interest on interest” on loans of up to Rs2 crore – frozen by the Reserve Bank of India (RBI) in a six-month moratorium granted because of the coronavirus pandemic – was “not satisfactory”. Centre was responding on the same. The government, in its latest affidavit, said: “Policy is the domain of the government and court should not go into sector-specific financial relief. Any further relief, besides waiving of compound interest for loans up to Rs 2 crore, is detrimental to the national economy and banking sector.”
The government had told the top court last week that it was ready to waive interest on the repayment of loans of up to Rs 2 crore. The interest waiver will be applicable for the loans taken by MSMEs (Micro, Small and Medium Enterprises), for educational, housing, consumer goods and auto loans and for credit card dues.
However, the court on Monday said the centre’s affidavit was not satisfactory and asked for a do-over in a week. The top court said the centre’s affidavit “fails to deal with several issues raised by petitioners” while hearing petitions on a waiver of interest on deferred EMIs – or interest on interest – to help small borrowers during the coronavirus pandemic.
The centre was asked to consider the concerns of the real estate and power producers in fresh affidavits.
However, in its affidavit, the government said that “relief for specific sectors cannot be demanded through petitions”.
“The only solution is lending institutions and their borrowers formulate restructuring plans… and centre, and RBI cannot interfere,” the centre’s affidavit reads, underlining that “as per Kamat Committee report it is it is not possible to arrive at one particular formula for sector-specific relief to deal with the pandemic.”
The government also said the banks will have to implement the compound interest waiver within one month from the date of notification.
RBI, however, has told the top court the “extension of loan moratorium should be left to banks to decide as per policy”. “Longer moratorium can raise risk of delinquencies after scheduled payments resume,” the RBI said in a separate affidavit.
The case will be heard again by the Supreme Court on October 13.
As an independent media platform, we do not take advertisements from governments and corporate houses. It is you, our readers, who have supported us on our journey to do honest and unbiased journalism. Please contribute, so that we can continue to do the same in future.
