Tushar Mehta said deliberations are being held at the “highest level” of government.
The Supreme Court on Thursday yielded to a persistent call from the Union government for two more weeks to reflect with the Reserve Bank of India (RBI) and banks on critical issues such as restructuring sector-specific loans, charging borrowers’ interest on deferred loan interest during the moratorium period. The next hearing is scheduled for September 28.
Solicitor General Tushar Mehta told a bench headed by Judge Ashok Bhushan that deliberations were being held at the “highest level” of government.
Individual borrowers and various sectors of commerce and industry, including traders, electricity and real estate, have urged the court to issue an interim order extending the moratorium on loans which expired on August 31.
They said restructuring loans would not help because banks have already started charging interest on interest. Their credit ratings and the value of their assets have gone down. This seriously affected the confidence of account holders. Most affected are individual borrowers, who came out of the moratorium to find they are supposed to pay interest on deferred loan interest during the moratorium.
But the court, which was on the verge of issuing an interim order, contented itself with recording the versions of the government and the borrowers before deciding to wait for the results of “ongoing deliberations at the highest level”.
Expert panels were formed
His order indicated that the government had formed “expert committees” which would table reports. The government had promised to act.
Mr. Mehta assured the court: “We are approaching the problem holistically.”
Judge MR Shah told him, “You must have a comprehensive and clear policy. Anyway, it should be very clear ”.
Mr. Mehta said it would be an “autonomous policy”.
On the other hand, lead lawyer Rajiv Dutta, for an individual borrower, said the status quo as of August 31 should be maintained until the government takes a decision. The virus has seriously damaged the earning capacity of a large part of the population.
“Banks already charge compound interest. Everything is computerized. They are trying to restructure business loans. Lakhs of people have been hospitalized during the pandemic. Some of them were the only member of their family earning money, ”he said.
Senior lawyer Kapil Sibal, representing the real estate industry, said the restructuring would only help 5% of its loans. The rest cannot be restructured if the current policy is followed.
Senior counsel CA Sundaram also agreed with Mr. Sibal and Mr. Dutta that the court should pass an interim order extending the moratorium until the government makes a decision.
Appearing on behalf of the bankers, Senior Counsel Harish Salve noted that since PIL took a contradictory note, no order should be made by the court without hearing it.
Senior lawyer Mukul Rohatgi, for the State Bank of India, said fraudsters would profit if interim orders were made by the court.
Mr. Salve said, “If your credit score is too low, you can’t take out more loans. Are they [borrowers] will take loans in two weeks? “.
Senior lawyer V. Giri, for the RBI, said that “the restructuring policy is being carried out at the highest level”.
Addressing parties on both sides of the fence, Judge Shah said, “We are here to find a way. A solution”.