A bench of Justices Ashok Bhushan, R S Reddy and M R Shah asked the government to speed up the process of implementation and said, “We welcome the Centre’s decision taken in the interest of the common man. We want it to be implemented expeditiously.” Before arguments for the day were closed, Justice Shah said in a lighter vein, “Their (people’s) Diwali is in your hands.”
In its October 2 affidavit, the government had informed the court about waiver of interest on interest for instalments during the moratorium period for loans up to Rs 2 crore availed of by MSMEs and small borrowers. It had said that keeping in mind the varying terms and interest rates for different types of loans in this category, necessary mechanisms for implementation of the decision would be notified “on or before November 15”.
The bench repeatedly questioned the Centre on Wednesday on why it needed a one month-window to implement the move when it could be executed by simply issuing a directive to banks. “You just have to issue a direction to banks to implement the decision. See the plight of common people. They have welcomed the decision. But they want formal orders for concrete implementation of the decision. It is such a small decision. Why would you require more than a month to implement?” it asked.
However, solicitor general Tushar Mehta, while emphasising that the Centre had decided to waive compound interest keeping the plight of common people in sight, suggested that the task was far more complex. “When the Centre says in an affidavit that it will be done, there should be no doubt about implementation of the decision in letter and spirit. This entails a huge financial burden on the government as it has to reimburse banks the compound interest that is waived off. Individual borrowers who had not availed the moratorium would have to be paid back. But the loans are of different kinds. Credit card loans, consumer durable purchase loans, bank loans for different purposes have varying interest rates and require complex calculations,” he said.
“We are bound to implement the decision and will not benefit by delaying implementation. The notification will come on or before November 15,” he said. The bench sought information about progress in implementation of the decision by November 2, the next date of hearing.
Appearing for the Indian Banks Association, senior advocate Harish Salve told the bench that once the government has taken a policy decision, it will be implemented. “But the number of beneficiaries falling in the Rs 2-crore category loan is very large. We (banks) cannot act on the policy decision without the Reserve Bank of India issuing a circular/notification and providing the mechanism for implementation of the policy decision,” he said.
In its October 2 affidavit, the Centre had said compound interest waiver relief would be available to all small borrowers irrespective of whether or not they had availed the moratorium on repayment during the six-month period. This means those who kept paying instalments during the moratorium period will also benefit in the same way from the decision on waiver of compound interest as will now be available to those who did not pay instalments for loan servicing during the six-month period.
“This category of borrowers, in whose case the compound interest will be waived, would be MSME loans and personal loans up to Rs 2 crore of the following categories — MSME loans, educational loans, housing loans, consumer durable loans, credit card dues, auto loans, personal loans to professionals and consumption loans,” the finance ministry had said.
Watch Loan moratorium: SC welcomes relief on interest but wants it to be speeded up