In an affidavit filed in response to the SC’s criticism that the Centre was not specifying its stand and was trying to hide behind the RBI, the finance ministry took a stand similar to that of the central bank and said interest could not be waived as it would adversely affect 197 crore depositors, most of whom depended on interest earned on money put in banks. “Any moratorium is transient by its very nature and has to end one day. Thus, the best interest of the economic health of the country, as well as that of respective borrowers, would be best served by paving the way for a more durable long-term solution of debt restructuring,” the ministry said.
SG Tushar Mehta informed a bench of Justices Ashok Bhushan, R S Reddy and M R Shah on Tuesday that the Centre, the RBI and the association of banks were putting their heads together to identify stressed sectors and assess the varying impact of the slowdown to devise sector-specific financial relief instead of a “one size fits all” mechanism.
The bench said a bunch of PILs by individuals and industries seeking waiver of interest on the principal amount during the moratorium period, or at lease waiver of interest on interest accrued during the sixmonth period, would be heard on Wednesday. “This will be the only case that we will hear on Wednesday,” it told the SG, indicating that no more adjournments would be granted.
The finance ministry said RBI’s August 6 circular provided a framework fully empowering the banks “to resolve Covid-19-related stress and customise relief to individual borrowers through grant of various concessions in terms of alteration in rate of interest and haircut on amount payable as interest; extension of residual tenor of loan, with or without moratorium, by up to two years; waiving penal interest and charges; rescheduling repayment; converting accumulated interest into a fresh loan with a deferred payment schedule; and, sanction of additional loan”.