Virendra Pandit
New Delhi: The Centre may consider allocating an additional Rs.7,000 crore as additional relief to borrowers following the Supreme Court’s Tuesday verdict on loan moratorium provided by the RBI during the Covid-19 enforced lockdown last year, reports said.
In its verdict, the apex court refused to interfere with the government and the Reserve Bank of India (RBI)’s decision to not extend the loan moratorium period beyond August 31, 2020, and added that it cannot do a judicial review of the Centre’s financial policy decision unless it is malafide and arbitrary.
The Centre had earlier informed the top court that if it were to consider waiving interest on all the loans and advances to all categories of borrowers for the six-month moratorium period (March-August 2020) announced by RBI, then the amount foregone would be more than a whopping Rs. 6 lakh crore.
If the banks were to bear this burden, then it would necessarily wipe out a major part of their net worth, rendering most of the lenders unviable and raising a very serious question mark over their very survival, it had said.
The Centre said this was the main reason as to why a waiver of interest was not even contemplated and only payment of instalments was deferred.
The Supreme Court agreed with this argument.
“What is best in the national economy, and in what structure the financial relief packages are to be made are to be decided by the Government and RBI in consultation with experts,” the SC said.
“Power of judicial review will not ordinarily interfere in policy decisions unless such policy is malafide,” it added.
The apex court, however, made it clear that there will be no compound interest charged on the “deferred interest” during the moratorium period.
An apex court bench, headed by Justice Ashok Bhushan, delivered its verdict on a batch of pleas filed by various trade associations, including from real estate and power sectors, who also sought extension of the loan moratorium period and other reliefs in view of the economic downturn after the pandemic.
