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Monday, September 21, 2020

Waiver of interest on interest ‘against basic canons of finance’: Centre to SC

In an affidavit filed in the Supreme Court, the Finance Ministry said the government is alive to the problems faced by borrowers in the various sectors.

By: Express News Service | New Delhi | Updated: September 2, 2020 10:31:55 am
post matric scholarship scam, ghost institutions, Chandigarh news, Punjab news, Indian express newsThe inquiry report was submitted by a panel of three officers including Jaspal Singh, KAP Sinha and Vivek Partap Singh to Chief Secretary Vini Mahajan on Wednesday evening. (Representational)

A more durable long-term solution of debt restructuring will be the best for economic health of the country and borrowers, and waiver of interest on interest during the moratorium allowed on loan repayment owing to the Covid-19 situation “would … be against the basic canons of finance”, the Centre has said.

In an affidavit filed in the Supreme Court, the Finance Ministry said the government is alive to the problems faced by borrowers in the various sectors.

However, since they are not a homogenous group and belong to various sectors and sub-sectors with their own unique problems, it was decided against having a “one-size-fits-all” solution, instead work out a solution through the RBI which in turn has decided that banks should take various measures for relief.

The Reserve Bank of India (RBI) has come out with guidelines facilitating revival of real estate sector activities and mitigating the impact on borrowers by enabling lenders to grant concessions to them, the Centre added.

This, it said, takes care of the MSME (micro, small and medium enterprises) sector, personal loans and corporate loans, keeping in mind the overall financial stability of the economy, economic stability of banking sector and interest of the depositors.

The court is seized of a petition urging it to declare as ultra vires the part of the March 27 RBI notification about charging interest “which creates hardship in the present scenario of complete national lockdown being extended from time to time due to Covid-19 outbreak”.

The Supreme Court will take up the matter on Wednesday.

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