Judicial matters must wait until November 15 to notify the compound interest exemption regime.
The Supreme Court on Wednesday questioned the need for the government to wait a full month, until November 15, to notify the implementation of a plan to waive compound interest (interest on interest) accumulated during the moratorium on loans worth up to 2 crore.
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The waiver program is intended to “hold in hand the small, vulnerable borrowers” whose fortunes fell during the foreclosure.
“Their Deepavali is in your hands,” the court told the government.
The waiver scheme has been proposed for eight different categories, including MSMEs, education, housing, consumer durables, credit cards, auto, personal and consumer loans.
The Reserve Bank of India (RBI) had called the Centre’s resolution “further relief” for the financial difficulties caused by the pandemic among borrowers.
But the court appeared skeptical on Wednesday.
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“After making the decision to forgo their compound interest for the moratorium period, our only question is why do you need a month? [till November 15] to implement this scheme? Why are you delaying the publication of the circular? Judge Ashok Bhushan asked Solicitor General Tushar Mehta, appearing for the Center and the RBI.
“Consider the fate of the common man”
Judge MR Shah, on the bench, asked Mr. Mehta to consider the plight of the common man.
“In his mind, the government has already helped him [with the waiver of compound interest]… Now he wants concrete results. When you’ve already made a decision, why do you need a month just to issue a circular, ”Judge Shah asked.
Mr Mehta replied that the scheme itself was proof of the government’s concern for the common man. “We have already considered the plight of the common man. That’s why we brought this pattern … We wouldn’t gain anything by delaying it. There are complexities involved. November 15 is the outer limit, ”he explained.
At this, Judge Shah said the court welcomed the government’s move to “take care” of the common man.
Read also : No benefit from RBI’s loan moratorium program, Supreme Court says
“We welcome it, but you need to implement it quickly,” Judge Shah said.
Mr. Mehta replied that certain “modalities” need to be worked out.
Judge Bhushan observed: “The terms will take a month? If you had sent a circular to the banks, they would have taken action … So far, you haven’t. You only told the court.
Mehta said the government detailed the scheme in an affidavit in court. He wouldn’t go back on his word.
Senior lawyer Harish Salve, for the Indian Banks Association, assured the judiciary, also including Judge R. Subhash Reddy, that the plan would be “developed and executed”.
He submitted, “It must be done. Everything the government said in the affidavit must be done. there is no doubt. He said a month might be needed as there were a large number of borrowers in the ₹ 2 crore category.
Mr Mehta said the calculation of interest will also vary.
Senior lawyer P. Chidambaram, representing the Association of Shopping Centers of India, said the court appeared to want a clear “statement” from the government and the banks.
“Mr. Chidambaram, we don’t want any declaration, we want a circular,” Judge Bhushan responded.
Mr. Chidambaram then said that a message should then be sent from the court.
“Sorry, but a message has already been given by the government [about its intention to help the small borrowers]”, added Mr. Mehta.
Senior lawyer Rajeev Dutta, for petitioner Gajendra Sharma, called for “a line from the judiciary to reassure the common man”.
But the judiciary refrained from passing any formal order. Instead, the court has scheduled a hearing for November 2. The judiciary said it would then assess the actions taken by the government.