The Reserve Bank of India told the Supreme Court on Thursday that it is facing “great difficulties” with the court’s interim order against declaring as non-performing assets (NPAs) accounts found perfectly good till August 31, 2020.
Also read: 'Interest on interest' waiver: What you need to know
On September 3, the apex court had, as an interim measure considering the hardships of the pandemic and moratorium, directed that “accounts which were not declared NPA till August 31, 2020 shall not be declared NPA till further orders.”
Appearing before a Bench led by Justice Ashok Bhushan, RBI counsel and senior advocate V. Giri submitted that “the interim order imposed by My Lords is causing great difficulties for the RBI.”
Mr. Giri urged the court to hear the RBI on this issue on the next date.
The court listed the case for November 18 as Solicitor General Tushar Mehta, who appears for the government and also the RBI, was arguing before another court at the time.
During the short hearing, the main petitioner, who represents individual borrowers in the Supreme Court, expressed satisfaction with the government scheme to pay back the difference in the compound interest and simple interest charged during moratorium for eight categories of loans worth up to ₹2 crore.
Also read: Loan interest waiver to be credited by November 5
Senior advocate Rajiv Dutta, appearing for individual borrower and main petitioner Gajendra Sharma, said “we are grateful and would like to withdraw the writ petition. Please record my submission.”
The pay-back scheme is meant to bring “additional relief” to borrowers affected by the pandemic-induced financial distress.
“The Central government has directed that all lending institutions shall give effect to the scheme and credit the amount calculated as per the scheme into the accounts of the borrowers by November 5,” the Ministry of Finance said in a short affidavit in court.
All lending institutions will credit the difference between compound interest and simple interest on loans in the respective accounts of eligible borrowers for the period between March 1 and August 31, the affidavit had said.
Also read: Lockdown moratorium | Outstanding till February 29 qualify for interest relief
The scheme will cover MSME, education, housing, consumer durables, credit card, auto, personal and consumption loans.
Clause three of the waiver scheme defines “all financial institutions” to include banking companies, public sector banks, cooperative banks, regional rural banks, all India financial institutions, non-banking financial companies, housing finance companies registered with RBI, national housing banks.
The RBI has already informed the Supreme Court about its advisory to banks and financial companies to fully comply with a government scheme to pay back borrowers compound interest or interest on interest charged on their loans during the six-month moratorium period.
The Union Cabinet had approved the scheme on October 21.
