InvestorQ : Is it true that the Supreme Court has further extended the moratorium on loans by banks?
Rutuja Nigam made post

Is it true that the Supreme Court has further extended the moratorium on loans by banks?

Answer
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2 weeks ago


Let me clarify. The Supreme Court did not extend the moratorium. Instead it has extended its own interim order that no account must be declared NPA till further orders. The original date of September 10 has now been extended till September 30.

The central government informed the Supreme Court that an expert panel under the chairmanship of K V Kamath had been set up to look into the issue of interest being charged by banks on instalments that were deferred during the COVID-19 moratorium.

However, the SC has also clarified that this was just one last opportunity being given to the RBI and the government and thereafter the matter will not be adjourned. Hence a final decision on this matter is expected on 28 September and the no downgrade is on till then.

Harish Salve, appearing on behalf of the banks, reiterated that the norms and guidelines have still to be issued with regard to individual borrowers and that would be through in a couple of weeks. It is expected to be cleared by the centre after RBI approval.

The Supreme Court has once again reiterated that the government and the RBI must make its stand clear on charging of interest on interest by banks. The levy of interest on interest may be good business decision but it defeats the purpose of giving relief.

On September 3, SC had ordered that accounts which were not declared as NPAs till August 31 shall not be declared NPA till further orders. Now that order will remain in force till the end of September, by which time hopefully there should be a final decision.