The moratorium period on repayment of loans during the COVID-19 pandemic is “extendable” by two years and several steps have been taken to help the stressed sectors, the Centre and the RBI told the Supreme Court on Tuesday.
A bench headed by Justice Ashok Bhushan was informed by Solicitor General Tushar Mehta, appearing for the Centre and Reserve Bank of India, that the economy contracted by nearly 24 per cent in the April-June quarter due to coronavirus-related lockdown and restrictions.
The bench, also comprising Justices R S Reddy and M R Shah, said it would hear on Wednesday the pleas which have raised the issue of interest being charged on instalments which have been deferred under the central bank’s scheme during the moratorium period.
At the outset, Mehta told the bench that the Centre has filed its affidavit in the matter.
When the court said that it has not yet received the affidavit, he said the bench should look into it and the matter be listed after two-three days.
Mehta said several steps have been taken for stressed sectors.
“Let the Central government, RBI and bankers should put their head together on the aspect of interest on interest,” he said.
“The moratorium is extendable by two years,” he added.
Mehta said that authorities have utilised the time and narrowed down the issue to the point on interest.
“There are stressed sectors and national economy has contracted by 23 per cent,” he said, adding, “I have filed the affidavit and heavens will not fall if the matter is taken after two-three days or tomorrow”.
Mehta said this matter was not adversarial and authorities were trying to resolve the issues as the country is facing problems due to the pandemic.
“We will list the matter for tomorrow and we will take it as the only matter, hear it and decide it,” the bench said while posting the matter for Wednesday.
India’s economy has suffered its worst slump on record in April-June, with the gross domestic product (GDP) contracting by 23.9 per cent as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment.
The GDP contraction in the world’s fifth-largest economy compared with 3.1 per cent growth in the preceding January-March quarter and 5.2 per cent expansion in the same period a year back, according to official data released on Monday.
On August 26, the apex court had asked the Centre to reply within a week on the issue of interest being charged on instalments which have been deferred during the moratorium period.
The top court had earlier asked the Centre and the RBI to review the move to charge interest on deferred EMIs during the moratorium period.
The court had earlier said there was “no merit in charging interest on interest” for deferred loan payment installments during the moratorium period announced in wake of the COVID-19 pandemic.
The bench was hearing pleas, including the one filed by Agra resident Gajendra Sharma who has sought a direction to declare the portion of the RBI’s March 27 notification “as ultra vires to the extent it charges interest on the loan amount during the moratorium period, which create hardship to the petitioner being borrower and creates hindrance and obstruction in ‘right to life’ guaranteed by Article 21 of the Constitution of India”. Sharma has also sought a direction to the government and the RBI to provide relief in repayment of loan by not charging interest during the moratorium period.