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Supreme Court Extends Loan Moratorium Till September 28

On Thursday, the Supreme Court ordered an interim extension of the loan moratorium till 28 September, directing banks not to tag any loans as non-performing till further directions.

On Thursday, the Supreme Court ordered an interim extension of the loan moratorium till 28 September, directing banks not to tag any loans as non-performing till further directions. The case has been adjourned for the last time by the apex court, granting the Centre, Reserve Bank of India (RBI), and banks two weeks to work together and file a concrete reply on their stand on waiving of interest charged during the moratorium period.

The apex court bench headed by Justices Ashok Bhushan and comprising R Subhash Reddy and MR Shah, passed an interim order, hearing a batch of petitions seeking a waiver of interest, or waiver of interest on interest on the suspended EMIs during the extended moratorium period amid the nationwide lockdown due to the covid-19 outbreak.

The Supreme Court will continue the hearing in the case on 28 September.

The bench took on record the submission made by Solicitor General Tushar Mehta, representing the centre. The submission noted that the government at the highest level was considering all the issues in this batch of plea related to loan moratorium. The government shall file a response within 2 weeks.

An expert committee had been constituted to look into all the issues and action will be taken by the government, the order noted.

Representing Real Estates Associations, Senior advocate Kapil Sibal argued that the “downgrading of borrowers is still continuing. Borrowers must be protected against such downgrading.”

Senior advocate Harish Salve, representing Indian Banking Association (IBA), opposed the plea for downgrading and sought two weeks’ time to cater to this issue.  Requesting the bench, Salve said: “Please don’t pass any orders on downgrading today because this is based on many factors. Companies will suffer.

“We are inclined to grant two weeks to file an appropriate affidavit. We make it clear that we shall consider different prayers made by petitioners on the next date. All decisions taken by the RBI, GOI or the banks should be placed before the Court for consideration,” the bench said in its order.

The top court, on September 3, had passed an interim direction holding that the accounts not declared as a non-performing asset (NPA) as on 31 August shall not be declared as NPAs till further orders.

On 22 May, the central bank extended a moratorium on term loans till 31 August amid the nationwide lockdown due to covid-19. In March, the central bank had allowed three months moratorium on loan repayment.

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