In an affidavit earlier than the Supreme Court, the Reserve Bank of India has mentioned it could not be potential to grant extra time as a reduction for sectors hit by the coronavirus pandemic. In the affidavit, the RBI and the Centre have mentioned the professional committee suggestions have already seemed into sector-specific circumstances for mortgage compensation. Directions have been given to banks and monetary establishments to restructure loans as wanted, the affidavit learn.
“Resolution Framework issued by the Reserve Bank on August 6, 2020, is aimed toward facilitating the revival of actual sector actions and mitigating the influence on the last word debtors, that are underneath monetary stress attributable to financial fallout on account of Covid-19 pandemic. In phrases of the Resolution Framework, solely these borrower accounts shall be eligible for a decision which had been labeled as customary, however not in default for greater than 30 days with any lending establishment as on March 1, 2020,” the RBI stated in the fresh affidavit.
In the loan moratorium case, the Central government had earlier said the policy decisions were the domain of the executive government and the court should not go into the issue of sector-specific reliefs.
The Union government also said that sufficient leeway has already been provided to accommodate the impact of COVID-19 on sectors while stipulating specific ratios.
Earlier on October 2, the Finance Ministry had filed an additional affidavit, stating the ministry has decided to waive compound interest (interest on interest) charged on loans of up to Rs 2 crores for a six-month moratorium period announced due to the pandemic from individual borrowers as well as medium and small industries.
On Monday, Supreme Court said the Centre’s response did not contain “crucial particulars” and asked it and the RBI to place on record the KV Kamath committee recommendations on debt restructuring in view of COVID-19 related stress on various sectors as well as the notifications and circulars issued so far on loan moratorium.