'Interest on Interest': Can't Announce More Relief, Courts Shouldn't Interfere in Fiscal Policy, Centre Tells Supreme Court
The Centre informed the Supreme Court that it cannot give more relief to different sectors amid the coronavirus pandemic other than already announced financial packages and waiver of interest-on-interest.
New Delhi, October 10: The Centre on Friday informed the Supreme Court that it cannot give more relief to different sectors amid the coronavirus pandemic other than already announced financial packages and waiver of interest-on-interest on loans up to Rs 2 crore in eight categories. In its affidavit, the Centre emphasised that the "courts should not interfere in fiscal policy", urging the apex court not to go into sector-specific financial assistance. Govt Sets Up Expert Panel to Look into Issue of Waiver of Interest During Moratorium.
"Policy is the domain of the government and court should not go into sector-specific financial relief. Any further relief, besides waiving of compound interest for loans up to Rs 2 crore, is detrimental to the national economy and banking sector," the Ministry of Finance said in the affidavit. It also indicated that it would not be possible to revise the Rs 2 crore limit on loans.
Last week, the Centre told the Supreme Court that it has taken a decision to waive "interest on interest" on loans up to Rs 2 crore in eight categories during the six-month moratorium period. The categories of loans up to Rs 2 crore include MSME loans, education loans, housing loans, consumer durable loans, credit card dues, auto loans, personal loans to professional and consumption loans.
However, on Monday, a bench headed by Justice Ashok Bhushan and comprising Justices R. Subhash Reddy and MR Shah noted the affidavit filed by the Centre, mentioning the waiver of interest-on-interest on loans up to Rs 2 crore in eight categories, does not give details sought by court order on September 10. It also observed that no consequential notification, circulars have been issued either by the RBI or by the Centre, to implement the waiver of the interest-on-interest scheme.
The Reserve Bank of India (RBI) had announced the loan moratorium to help borrowers combat the impact of the COVID-19 pandemic. However, banks are charging interest on instalments which were deferred during the moratorium period.
(The above story first appeared on LatestLY on Oct 10, 2020 10:45 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).