Centre to SC: Rs 5,270 cr credited in interest waiver plan under moratorium

New Delhi :  Solicitor General Tushar Mehta on Thursday informed the Supreme Court that Rs 5270 crore has been credited to 13.12 crore accounts in the interest waiver plan so far. The Centre has subsidized compound interest for a 6-month moratorium for all loans up to Rs 2 crore. Mehta submitted before a bench headed by Justice Ashok Bhushan that the government is on top of the matter and it is taking all the necessary steps. Mehta submitted that pre-COVID defaulters cannot benefit from a fresh resolution framework and the committee for resolution framework for COVID related stress has assessed various sectors.

Detailing other measures, he assured the top court that the Disaster Management Authority has done whatever it could. Mehta told the Supreme Court that it is the responsibility of the banks to credit compound interest waiver for loans up to 2 crores, not for consumers to remind the banks of this scheme. He added that the IBC process has already been suspended since March to stop companies from slipping into bankruptcy. ” Will ensure that those who paid during moratorium are not short-changed”, submitted Mehta.

During the hearing, the bench noted that credit card users should not be given any benefit of compound interest waiver, as they are not borrowers. The bench said the credit card users don’t have a loan, instead they are purchasing. The Centre requested the top court not to consider further relief to borrowers. Mehta also cited the Kamath Committee’s report on restructuring of big loans, and submitted that a separate mechanism for restructuring small loans by lending institutions is already there. The bench queried Mehta, was the Kamath committee’s recommendations not meant for big borrowers? Mehta clarified that it was for big borrowers and they are applicable to lending greater than Rs 1,500 cr. The top court will continue to hear the matter next week. The submissions from the Centre came on scores of pleas filed seeking waiver of interest on interest during the loan moratorium period in the backdrop of the ongoing COVID-19 pandemic.