Loan moratorium is fiscal policy matter, government on top of it & required steps taken: Centre to SC

The Centre on Thursday told the Supreme Court that issue pertaining to loan moratorium in view of the COVID19 pandemic is a fiscal policy matter and the government has taken various proactive steps keeping in mind different sectors.

While apprising the apex court about the steps and measures taken so far by the Union Finance Ministry and the Reserve Bank of India (RBI), the Centre told a bench headed by Justice Ashok Bhushan that it is not a case of “no action” and no further indulgence may be given even if the petitioners say that there could be better option on this issue.

The bench, also comprising Justices R S Reddy and M R Shah, was told by Solicitor General Tushar Mehta that to ask for sector specific reliefs from the top court now is perhaps not a remedy available under Article 32 of the Constitution.

The apex court was hearing a batch of petitions relating to charging of interest on interest by banks on EMIs, which were not paid by the borrowers who availed of the loan moratorium scheme in view of the pandemic.

The RBI had on March 27 issued the circular which allowed lending institutions to grant a moratorium on payment of instalments of term loans falling due between March 1, 2020, and May 31, 2020, due to the pandemic. Later, the moratorium was extended till August 31 this year.

The RBI and the Finance Ministry have already filed separate additional affidavits in the top court saying that the banks, financial and non-banking financial institutions will credit into the accounts of eligible borrowers by November 5 the difference between compound and simple interest collected on loans of up to Rs 2 crore during the moratorium scheme period.

During the hearing conducted through video-conferencing on Thursday, Mehta told the bench that it is the responsibility of banks to credit the difference between compound and simple interest collected on loans of up to Rs two crores during this period.

He said the disaster management authority has taken all the steps which were required to be taken by it and the NDMA has already done what it could have under the law.

“Centre has proactively taken steps through the Finance Ministry and the RBI,” Mehta said, adding, “These are all fiscal policy matters.”

He said if the court is satisfied that the government is examining these issues, taking adequate steps and grievance redressal mechanism lies within the system itself then further indulgence was not required.

“It is not a case of no action,” the solicitor general said, adding, “The government is on top of it”.

He said that several relief measures were announced and decisions were taken by the concerned authorities keeping in mind every sector.

Mehta referred to the special economic and comprehensive ‘AatmaNirbhar Bharat’ package of Rs 20 lakh crore announced by the government in May and other relief measures to fight the pandemic.

The bench also heard submissions of senior advocate A M Singhvi who referred to issues pertaining to power sector, especially power generation companies.