Solicitor General Tushar Mehta, appearing for the Central government, will continue his submissions before a bench led by Justice Ashok Bhushan tomorrow as his arguments today remained inconclusive.
Mehta submitted that he does not think that the Reserve Bank of India’s (RBI) August 6 circular is contested here in these petitions.
“The issue before the Centre is that whether interest can be charged during the moratorium period or not. Writing off interest will weaken banks and economic conditions. We have different types of banks, and also we have Nonbank financial companies (NBFCs),” he said.
One of the parties in the moratorium petitions case, an association named CREDAI, through senior lawyer A Sundaram, told the court that it is really unfair to charge penal interest on borrowers and said this can lead to a possible increase of the non-performing assets (NPAs) in the future.
Senior lawyer Ranjit Kumar, appearing for Shopping Centres Association of India, told the bench that what they are facing today could be an effect of disaster added that mitigation measures are needed for relief and other parameters.
RBI cannot become the mouthpiece of banks, Kumar said.
“Our situation is really very bad, theatres, bars, food courts not being allowed, how will we earn and pay salaries, my lords, please consider this, and added that the relief should come sector-wise,” he added further noting that all the parameters of economy show shrinkage and recession.
The RBI Governor said so in May, things still bad in September, Kumar said.
Senior lawyer Kapil Sibal, who appeared for borrowers and the Maharashtra chapter of the construction industry, submitted if the moratorium would not be extended, then many will be in default. He sought an extension of loan moratorium period and said that an expert committee should come with a sector-wise plan.
One of the petitioners in the case, lawyer Vishal Tiwari today argued that the moratorium period should be extended till December 31, keeping in view the COVID-19 pandemic and the current financial hardships the borrowers are facing.
“No alternate relief like financial restructuring is going to end the financial hardships the borrowers faced at present. The financial restructuring is nothing, but a maze created for the borrowers,” Vishal Tiwari said.
Earlier, the Central government had submitted that the loan moratorium period may get extended by up to two years in view of the ongoing COVID-19 pandemic.
The top court was hearing two pleas filed Gajender Sharma and lawyer Vishal Tiwari, seeking directions to extend the moratorium period to help borrowers in deferring their EMI payment on term loans and directions for waiver of interest on the loan repayment during the moratorium.