The Supreme Court on Wednesday said that the Government should implement “at the earliest” the waiver on compounded interest on loans of up to Rs 2 crore under the RBI moratorium scheme as the borrower cannot be expected to keep waiting for a month, adding that the common man’s Diwali is in the government’s hands.
“The Common man’s Diwali is in your hands,” the top court told the Centre.
The Centre had stated in an affidavit last Saturday that the government may require time till November 15 to come out with a formal scheme announcing the waiver on compound interest.
Taking strong objection to such tactics by the Centre, the three-judge bench headed by Justice Ashok Bhushan said, “What you have decided must percolate down to the beneficiaries. You announced a waiver on compounded interest on October 2 but no direction has been issued to the banks. Despite your decision, the common man is worried about being charged interest on interest by banks. Why should it take you so long to work out modalities, you seem to be simply delaying the whole thing.”
Solicitor General Tushar Mehta, who represented the Centre, informed the court that the waiver on compounded interest has been issued on loans up to Rs 2 crore for eight categories of beneficiaries. These include loans given to micro, small and medium enterprises (MSMEs), personal loans offered on account of housing, education, consumer durables, auto, consumption, personal loan to professionals, and credit card dues.
Mehta said, “When the Centre has stated in the affidavit that the decision will be implemented, it will be done. The outer limit is November 15 but we intend to do it much before that. We have taken the decision seeing the plight of the common man. We do not stand to gain anyway by delaying it any further.”
The bench, also comprising Justices RS Reddy and MR Shah, replied, “There is difference in ‘will be implemented’ and ‘being implemented’. Once you have taken a decision it must be implemented at the earliest. We do not agree that such a long time is needed for such a small decision.”
“The modalities to be followed by the lending institutions will be formulated in a scheme which will be a part of an Office Memorandum (O.M). Considering the complexities of different categories of borrowers and their different terms and conditions, such a scheme will be issued by way of an Office Memorandum on or before November 15.” the Centre said last week.
Senior advocate Harish Salve, appearing for the Indian Banks Association (IBA), a consortium of over 200 banks, assured the court that whatever the Centre has decided will be implemented.
“The numbers are large of the eight categories of beneficiaries who will benefit from the scheme. Our problem is we cannot do anything without a circular issued by the Reserve Bank of India (RBI),” he said.
The bench wondered why the modalities were not worked out before the Centre made the announcement of the waiver before the court.
“The lending institutions will be required to take suitable steps for implementing the decision of waiver of interest on interest [compounded interest] in the respective accounts of the eligible borrowers within one month from the aforesaid O.M, subsequent to which the lending institution will approach the Central Government for reimbursement,” said the government
The court posted the matter to November 2.
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