The government on Thursday constituted an expert committee which will measure the economic impact of waiving of interest and interest on interest on the Covid-19 related loan moratorium.
The expert panel, chaired by former CAG of India Rajiv Mehrishi, will assist the government in measuring impact of such a waiver on the the national economy and financial stability, the finance ministry said in a statement. Other members of the committee are Ravindra H Dholakia, former Professor, IIM Ahmedabad and ex-member, of the RBI’s Monetary Policy Committee, and B Sriram, former managing director, State Bank of India and IDBI Bank.
“Various concerns have been raised during the proceedings of the ongoing hearing in Hon’ble Supreme Court of India, in the matter of Gajendra Sharma Vs. UoI and Others, of the matter regarding the relief sought in terms of waiver of interest and waiver of interest on interest and other related issues. Government has accordingly constituted an Expert Committee for making an overall assessment so that its decisions in this regard are better informed,” the Finance Ministry said.
The committee, which may consult banks and other stakeholders, will submit its report within a week. The panel will also suggest ways to mitigate financial constraints of various sections of society and measures to be adopted in this regard, the government said. The Reserve Bank of India has already released the final loan restructuring guidelines as the six-month moratorium on loan repayments ended on August 31.
Restructuring for corporate loans will be based on financial parameters set out in RBI rules, while for retail borrowers lenders will put in place board-approved policies for recasting loans. Almost 72 per cent of the banking sector debt to industry worth Rs 37.72 lakh crore which is facing stress in the wake of pandemic’s impact on economy is likely to come up for restructuring. Over Rs 2 lakh crore of retail (non-corporate) loans are likely to go for restructuring.
Meanwhile, the Supreme Court Thursday extended its interim order that no account is to be declared NPA till further orders after the Centre said an expert panel has been set up to look into the issue of interest being charged by banks on instalments deferred during the moratorium period due to the COVID-19 pandemic. The top court granted two weeks to the Centre and the Reserve Bank of India to file the affidavit and place before it the decisions taken in this regard, as per a PTI report.
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