NEW DELHI, Sept 3:
In a relief to stressed borrowers who are facing hardship due to impact of COVID-19 pandemic, the Supreme Court Thursday said that accounts which were not declared as non-performing assets till August 31 this year, shall not be declared NPA till further orders.
A bench headed by Justice Ashok Bhushan said this while hearing a batch of pleas which have raised the issue of interest being charged on instalments which were deferred during the moratorium period due to the COVID-19 pandemic.
The apex court passed the order while noting the submissions of senior advocate Harish Salve, who appeared for banks’ association and said that “no account shall become NPA at least for a period of two months”.
“In view of the above, the accounts which were not declared NPA till August 31, 2020 shall not be declared NPA till further orders,” the bench, also comprising Justices R S Reddy and M R Shah, said in its order.
Solicitor General Tushar Mehta, who appeared for the Centre and the Reserve Bank of India (RBI), said that banking sector is the “backbone of the economy” and “every sector” and “every economy” is under stress due to the pandemic.
Mehta said it is an accepted position worldwide that waiving off interest is not a good option for revival of economy.
While referring to the grievance raised by the petitioners, the bench said, “We are concerned with interest on the interest”.
Mehta referred to the affidavit filed recently by the Centre which said that under the RBI circulars the moratorium gives relief to borrowers as the account does not become NPA despite non-payment of dues during the period.
“Your submission is that there will be no NPA for two months. Then the banks should not take action against the borrowers in the meantime when we are hearing the matter,” the bench told Mehta.
The pleas filed in the apex court have raised issue pertaining to validity of March 27 circular of the RBI which allowed lending institutions to grant moratorium on payment of instalments of term loans falling due between March 1, 2020 and May 31 this year due to the pandemic. Later, the period of moratorium was extended till August 31.
During the hearing conducted through video-conferencing, the solicitor general told the bench that measures have been taken by the Finance Ministry and the RBI in tandem to deal with the situation arising out the pandemic.
“Impact of COVID is faced by every sector but its impact is different on different sectors. Like in Pharma and IT sectors, the impact is positive,” he said, adding that it was decided not to go for waiver of interest but to reduce the pressure of repayment of instalments.(PTI)
Trending Now
E-Paper
Follow our WhatsApp channel