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Solicitor General Tushar Mehta, representing the centre, told the Supreme Court that it is the responsibility of banks to credit the interest waiver on eligible loans up to Rs 2 crore. “The centre has proactively taken steps through the Finance Ministry and the RBI... These are all fiscal policy matters,” he said.
The loan relief is for personal, housing, education, auto and consumer durables loans, loans to micro, small and medium enterprises (MSME), besides loans to micro, small and medium enterprises (MSME) and credit card dues, subject to certain conditions.
A decision has been taken that those who paid EMIs during moratorium period cannot be punished, he said, outlining the various measures taken by the Finance Ministry and the RBI to minimise impact of the pandemic on society. Those measures included relief for the real estate sector, a Rs 3 lakh-crore package for micro, small and medium enterprises (MSMEs), an Rs 20 lakh-crore Aatmnirbhar package announced in May, and a Rs 19.8 lakh-crore liquidity boost to power distribution companies, he said.
The lawyer representing individual borrowers expressed their gratitude to the Supreme Court for holding the hands of borrowers.
Earlier, the RBI had instructed banks and other financial institutions to credit the difference in compound interest and simple interest on repayments of eligible loans up to Rs 2 crore due between March and August by November 5.
The lenders were asked to credit the amount irrespective of whether the borrower fully or partially opted for the relief, and claim a reimbursement from the government by December 15.
The government has decided to bear the cost of the scheme, estimated at Rs 6,500 crore. The amount - which is the difference between compound interest and simple interest for the six-month period - paid by lenders on eligible loans will be reimbursed by the government at a later date.
Meanwhile, the power producers informed the Supreme Court that while the moratorium applies to the principal loan, banks are taking coercive steps on guarantees and other aspects. A "subterfuge is happening, they said. The Supreme Court told the power producers to give their suggestions to the RBI and the centre, and asked the banking regulator to respond to relief sought by the power producers.
Previously, the government was forced to rethink its loan relief scheme after the RBI allowed borrowers to postpone loan instalments due between March and August, but also permitted banks to charge interest on such delays. That meant the borrower would be able to pay later, but at additional cost.
Initially, the RBI had on March 27 issued the circular which allowed lending institutions to grant a moratorium on payment of instalments of term loans due between March 1, 2020, and May 31,2020, on account of the pandemic. Later, the period of the moratorium was extended till August 31 this year.
(Except for the headline, this story has not been edited by NDTV staff and is published from a press release)