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Published On: Wed, Oct 14th, 2020

Top Court asks govt to implement ‘interest waiver’ scheme By November 2

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sc-14NEW DELHI : The Supreme Court today refused to allow the government a month’s time to implement the interest waiver on loans of up to Rs  2 crore, asking a decision has already been taken, why should it take so long to execute it. The Centre had argued that it needed the time for certain formalities, but the court set a fresh deadline of November 2.
“The Common Man’s Diwali is now in government’s hands,” said Justice MR Shah, who was part of the three-judge bench. “The common people are worried. We are concerned with people with loan up to 2 crores,” said the bench, which has been pressing the government to figure out a way to give relief to the people who have been unable to repay loans due to the coronavirus-induced lock down.
The Centre has already said that it would waive the compound interest on loans, which is expected to bring relief not only to individual borrowers but also banks. The government’s counsel said it was a “huge burden” but added that they are not “mentioning the figure”.
On 3 October, the central government said that it will ‘interest on interest’ on loans of up to 2 crore for six months through to the end of August. The government’s decision would come into effect before 15 November, Solicitor General Tushar Mehta told the apex court.
“Banks will waive interest on interest and then will be compensated by govt and the calculation will have different modalities. We will have to ensure that bank gives us a proper format,” Mehta added.

In March, the Reserve Bank of India had granted a three-month moratorium on loans due to the Covid pandemic. It was later extended till August 31. In September, the Supreme Court, in response to petitions, asked the government to chart out a course to help borrowers. A waiver of interest for the six-month moratorium period was also sought by a bunch of petitions.
Today, the government was expected to spell out the way ahead on an extension of moratorium, waiving of interest, sector-wise relief and its decision on the recommendations of Mehrishi Committee, which was asked to gauge the impact of interest waiver during the Covid-linked moratorium.
But the government sought more time, saying the outer limit for bringing relief to borrowers is November 15. “When you have taken a decision why it is delayed for one month?” the court responded.

The three judge bench comprising of Justices Ashok Bhushan, R Subhash Reddy & MR Shah on Wednesday said that the government must not delay the implementation any further. “Why one-month time to implement such a small decision….Benefits of government’s concessions to borrowers up to Rs 2 crore must be implemented as soon as possible,” the bench said.
The Reserve Bank said has said that it is not possible to extend moratorium period as it would affect the banking sector and the economy. The government has told the court it would waive the compound interest on loans up to ₹ 2 crore under a COVID-19 support plan.
It, however, asked the court not to permit any further judicial review saying it would not be possible to supplement the existing relief packages.
(With Agency Inputs ).

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