The RBI on Wednesday ruled out in the Supreme Court any further extension of moratorium on loans which ended on August 31, even as State Bank of India told the top court that any reliefs for distressed sectors can be mutually decided by banks and borrowers.
“The prayer for extension of date is not feasible…” senior advocate V. Giri appearing for the RBI told a bench headed by Justice Ashok Bhushan, while referring to the plea by several distressed sectors for extending the moratorium on loan till March 31, 2021.
Giri, however, told the court that in terms of the RBI circular on loan moratorium the distressed sectors/individuals can approach the banks with their requests, including on personal loans which would be honoured.
He said the eligibility of the borrower is clearly mentioned in clause 3 of the circular and stipulates that the eligibility would be on account of stress due to Covid-19.
In other words, he said the borrowers need not even carry with them the actual resolution plans for availing the benefit.
Senior advocate Mukul Rohatgi appearing for SBI however, questioned the maintainability of the batch petitions seeking reliefs from banks.
According to him the court should not interfere in the issue was it would entail over Rs 6 lakh cr to banks if the plea of the petitioners are entertained.
“My submission is that these are issues which cannot be decided by hearing parties in the courtroom. A large number of people have deposited their money. Under Article 32(for enforcement of fundamental right) restructuring of loans cannot be asked for by the petitoners,” Rohatgi argued.
The senior counsel noted that banks have complied with the various other directives of the RBI and Finance Ministry as such cannot give any further concessions to the different sectors. He was referring to the waiver of compound interests to borrowers of Rs two crore and below, besides the six months loan moratorium ending August 31.
“We have complied with the directives…you (court) have to leave it to the banks, because these are economic policies and I do not think that either the RBI or the Union of India could have done more than this.
“There are lakhs and lakhs of small depositors for every big borrower and this court must not lose sight of it,” Rohatgi argued.
The court later adjourned the matter to December 14.
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