Loan moratorium: Common man’s Diwali is in your hands, implement interest waiver as soon as possible, says SC

The Supreme Court on Wednesday said the centre should implement "as soon as possible" interest waiver on loans of up to Rs 2 crore under the RBI moratorium scheme in view of the COVID-19 pandemic, saying the common man's Diwali is in the government's hands.

The apex court sought to know from the Centre as to whether the benefit of loan interest waiver for borrowers of up to Rs 2 crore during the moratorium period has percolated to the common man.

The court, which observed that it is concerned about how benefit of interest waiver would be given to borrowers, said the Centre has taken a welcome decision by taking note of plight of common man but authorities have not issued any order in this regard.

Something concrete has to be done, a bench headed by Justice Ashok Bhushan said, adding, Benefits of waivers to borrowers up to Rs 2 crore must be implemented as soon as possible .

The top court, which posted the matter for hearing on November 2, told the advocates appearing for the Centre and banks that Diwali is in your hand .

The Centre recently told the apex court that going any further than the fiscal policy decisions already taken, such as waiver of compound interest charged on loans of up to Rs 2 crore for six months moratorium period, may be "detrimental" to the overall economic scenario, the national economy and banks may not take "inevitable financial constraints".

The top court is hearing a batch of petitions which have raised issues concerning the six-month loan moratorium period announced due to the COVID-19 pandemic.

The bench, also comprising Justices R S Reddy and M R Shah, said when authorities have decided something then it has to be implemented.

The government has taken a welcome decision taking note of the plight of common man. But you have not issued any order to anybody. You have simply given us the affidavit, the bench told Solicitor General Tushar Mehta.

We are now concerned about how waiver benefit will be given, the bench said, adding, We are only asking whether the loan interest waiver has percolated or not .

During the hearing conducted through video-conferencing, Mehta told the bench that the Centre has taken an informed decision and has taken a huge burden .

When Central Government says on an affidavit that it will be implemented then there should not be any apprehensions, Mehta said. There is diversity in lending and different modalities are required to be followed.

He said banks would waive interest on interest and then will be compensated by the government and calculation will have different modalities.

We are telling you that it is a welcome decision but they want some concrete things, the bench observed, adding, we welcome the decision of the Centre, only thing it should be translated practically .

The bench said the Centre may take steps to implement its decisions referred to in the affidavits filed in the court.

Senior advocate Harish Salve, appearing for banks association, told the bench that banks would implement whatever decision have been taken by the government.

Senior lawyer Rajeev Dutta, appearing for one of the petitioners, said the banks are capitalizing by taking interest on interest on existing loans.

We are small people with small loans (less than Rs 2 crore). They should not compound the interest in these cases," Dutta said.

To this, the bench said it has already ordered that banks cannot declare NPAs.