Loans Under Moratorium Till August 31 Not To Be Declared NPAs: Supreme Court

03 Sep 2020, 07:15 PM IST

The Supreme Court will hear the case again on September 10

The government told the Supreme Court the accounts of those opting for the moratorium haven't turned NPAs till September 1.
Solicitor General Tushar Mehta, representing the Centre and the RBI, said that the banking sector is the backbone of the country's economy, and that the government cannot take any decision which can weaken the economy.
"We have decided not to waive interest, but reduce payment pressure," Mr Mehta said.
He had told the top court on Wednesday that the idea of moratorium was to defer payments due to lockdown and not to waive interest.
The government is of the view that writing off interest will weaken banks and affect economic conditions. It has already told the top court that the loan moratorium can be extended by up to two years on account of the coronavirus-related situation.
Advocate Vishal Tiwari, one of the petitioners in the case, asked whether a three-month period, till November 1, would be given to borrowers to approach the banks for rescheduling or restructuring after August 31.
He also asked if EMIs would be deferred or no action will be taken in case of default.
The Supreme Court said that sector-wise studies need to be carried out on the effect of COVID-19. "Nobody has applied mind and come to mitigate the method sector-wise," the bench said.
The Reserve Bank of India (RBI) had in March granted a three-month loan moratorium - or deferment in repayments, and in May extended it till August 31.
The top court will hear the case on September 10.