Supreme Court on Tuesday allowed the waiver of interest-on-interest or the compound curiosity for all debtors through the six-month mortgage moratorium interval however declined to increase the six-month mortgage moratorium time period provided by the Reserve Bank of India (RBI) final 12 months, citing it a ‘policy decision’ of the Centre and RBI.
“It is directed that there shall not be any charge of interest on interest/compound interest/penal interest for the period during the moratorium and any amount already recovered under the same head, namely, interest on interest/penal interest/compound interest shall be refunded to the concerned borrowers and to be given credit/adjusted in the next instalment of the loan account,” learn the order by a three-judge apex court docket bench.
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The bench led by Justice Ashok Bhushan stated the highest court docket can’t do a judicial evaluate of the Centre’s monetary coverage choices except they’re malafide and arbitrary in its resolution on a batch of petitions in search of an extension of the mortgage moratorium interval and different reliefs.
The Supreme Court dismissed the petitions in search of a complete waiver of curiosity through the moratorium interval, extending the interval of the moratorium, and lengthening the interval for invocation of the decision mechanism 31.12.2020 supplied underneath the 6.8.2020 round.
The apex court docket additionally didn’t present any reduction to petition in search of sectorsmart reliefs by the RBI, and that the Central Government/RBI should present for some additional reliefs over and above the reduction packages already provided.
The RBI declared a three-month moratorium on mortgage funds due between March 1 and May 31. On March 27, it was later prolonged by three months till August 31, 2020.
Personal loans, housing loans, schooling loans, auto loans, client durables loans and loans to micro, small and medium enterprises (MSME) and bank card dues have been eligible for the mortgage reduction, which was topic to sure situations.
The Supreme Court additionally lifted the standstill on NPA classification. The apex court docket stated the interim reduction granted earlier to not declare the accounts of respective debtors as NPA now stands vacated.
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According to ICRA estimates on a proforma foundation, the banks’ gross NPAs stood at Rs 8.7 lakh crore or 8.3 per cent of the advances as towards the reported gross NPAs of Rs 7.4 lakh crore (7.1 per cent).
Similarly, the banks’ proforma web NPAs stood at Rs 2.7 lakh crore or 2.7 per cent of the advances towards the reported NPAs of Rs 1.7 lakh crore (1.7 per cent).
“The financial vacuum created by Covid-19 pandemic compelled the Indian Government to extend relaxations to both lenders and borrowers. However, with no end in sight, alternative methods for attaining economic equilibrium were considered in the past one year. The biggest temporary relief accorded to the borrowers was the non-declaration of NPAs by banks and NBFCs,” Sonam Chandwani, Managing Partner at KS Legal & Associates, advised ABP News.
“The recent Supreme Court judgement disallowing additional relieves such as total waiver of interest indicates a stringent stance and outlook of the Bench. This move was especially important as the pandemic has rendered numerous lenders unviable thereby raising serious questions over their survival,” Chandwani a
