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'Don't Hide Behind RBI, Take Own Stand': Supreme Court Raps Centre on Loan Moratorium Scheme

File photo of Reserve Bank of India logo.

File photo of Reserve Bank of India logo.

The Supreme Court told the Centre that it has enough powers to decide on the issue of waiver, and it was the government's responsibility to take steps under the Disaster Management Act. A loan moratorium was announced by the Reserve Bank of India (RBI) to allow more breathing room for borrowers amid the Covid-induced cash crunch.

The Supreme Court on Wednesday said the Central government is “hiding behind the RBI" and dithering from its own stand on whether there should be some relief in the form of waiver to those who have availed loans from banks and other financial institutions.

“You make your stand clear. You cannot not say anything. It is your responsibility to take steps under the Disaster Management Act. You have enough powers to decide the issue of waiver. You cannot just depend on the RBI," the bench headed by Justice Ashok Bhushan observed.

The court’s adverse comments against the Government came after Solicitor General Tushar Mehta referred to the RBI’s affidavit in the matter, and said the banking institutions are also distressed.

This invited the bench’s displeasure. “This isn’t the time to take care of only the business interests but you must also consider the plight of the people. That’s how RBI’s stands looks like and you are not taking any stand at all," retorted the bench, which also included Justices R Subhash Reddy and MR Shah.

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At this, the law officer said that these observations may have some repercussions against the government, which has been issuing all necessary directions against the Disaster Management Act.

“Then you must take a stand..There are two issues here. Whether any interest should be charged and whether any interest on interest should be charged during the moratorium period," replied the bench.

It reiterated that the Government is not filing any reply to make its stand clear but is rather only citing the RBI’s reply. The bench then gave the Centre one week to file its affidavit and take a categorical stand in the matter.

The case relates to a petition which has been seeking waiver of interests, as also waiver or interests on the deferred interests, during the RBI-mandated loan moratorium.

This plea pointed out that the moratorium is a futile exercise since banks are charging interest on the deferred interests and in reality, there is no relief to the common man.

first published:August 26, 2020, 12:19 IST