The Supreme Court will deliver a verdict on Tuesday on a series of allegations by various trade associations, including those in the real estate and energy sectors, seeking an extension of the loan moratorium and other reliefs in light of the COVID-19 pandemic. .
A bank headed by Judge Ashok Bhushan, who had reserved his verdict on the series of allegations on December 17 last year, will deliver the sentence.
The Center had previously filed with the superior court that if it considered waiving interest on all loans and advances to all categories of borrowers during the six-month moratorium period announced by the RBI in light of the COVID-19 pandemic, then the waived amount would be more than Rs 6 lakh crore.
If banks were to bear this burden, it would necessarily wipe out a substantial and larger portion of their net worth, rendering most lenders unviable and raising a very serious question mark about their own survival, he had said.
The government said that this was the main reason why an interest exemption was not even contemplated and only the payment of fees was deferred.
As an example, he had said that just in the case of the State Bank of India (which is the largest bank in the country), the six-month interest exemption would completely wipe out more than half of the bank’s net worth, which it has been accumulated for almost 65 years of its existence.
He had pointed out the sectoral relief measures adopted by the government for small and medium-sized enterprises / MSMEs, including those in sectors such as restaurants and hotels.
The Center has enacted an Emergency Credit Linked Guarantee Scheme (ECLGS) of Rs 3 lakh crore that provides additional credit at the lowest interest rate, with 100 percent government guarantee and no new guarantees, it said.
The scheme has been extended with higher financial limits to 27 sectors affected by COVID-19, including the restaurant and hotel sectors, he said.
On November 27 last year, the high court had asked the Center to ensure that all necessary steps are taken to implement its decision to waive interest on eight specific categories of loans paid up to Rs 2 million in view of the coronavirus pandemic.
The higher court had noted that the moratorium period granted by the Reserve Bank of India continued from March 3 to August 31, six months.
He has said that the COVID-19 pandemic has not only caused serious threats to people’s health, but has also overshadowed the economic growth of the country and other countries around the world.
The eight categories of loans are MSMEs (micro, small and medium enterprises), education, housing, durable consumption, credit card, automobile, personal and consumption.
On March 27, the RBI issued the circular that allowed credit institutions to grant a moratorium on the payment of installment loans between March 1 and May 31, 2020, due to the pandemic. Subsequently, the moratorium was extended until August 31 of this year.