The Supreme Court on Thursday called on all parties, including power producers, to file their comments and suggestions on the loan relief request with the central government and the Reserve Bank of India (RBI) within three days. . The tribunal took note of lead counsel Rajiv Dutta’s request for the claimant to dispose of his plea in view of the Centre’s decision to waive “interest on interest” during the loan moratorium period. The court took note of the request and observed that it will place the scrapping order on the following date.
The SC passed the ordinance while hearing the batch of petitions seeking directions on issues relating to the six-month loan moratorium period announced amid the covid-19 pandemic.
The Supreme Court, headed by Justice Ashok Bhushan, also ordered the Center and the RBI to submit their response to the remedy sought by the power companies.
Justices RS Reddy and MR Shah heard the arguments at length before postponing the case until next week for a detailed hearing.
Beginning the day’s arguments, Solicitor General Tushar Mehta, representing the Center, referred to the Centre’s affidavit filed on October 9 and briefed the judiciary on the many actions that have been taken by the Ministry of Finance and RBI. He mentioned the ??Packet of 20 lakh crore Aatm Nirbhar, ??90,000 crore cash infusion into struggling power utilities, relief for real estate sector and ??Package of 3 lakh crore for MSMEs.
He referred to the Kamath committee report highlighting a separate mechanism for restructuring large and small loans by credit institutions.
Mehta claimed that banks were given “full elasticity” to formulate resolution plans and even payment plans were allowed to be rescheduled. “Grant a moratorium based on the borrower’s income stream.
“We made the decision that those who paid for IMEs during the moratorium cannot be punished. Moratorium used or not used, or partially used – all are eligible, ”Mehta submitted. this.”
Senior lawyer Abhishek Manu Singhvi, representing the power companies, said there are various issues with the RBI circular which, while intended to provide relief, has an important exclusion.
Singhvi asked for instructions to allow the restriction on loans from LICs, hedge funds, REITs and foreign private banks, as power producers mainly borrow from them. He said that even before the announcement of the Covid closures, the parliamentary panel on March 7 had supported loan restructuring for us. “A lot of our lenders are not allowed to restructure our loans. REITs, LICs are not allowed to fund us, which should be allowed. These loopholes need to be rectified by the RBI… We have a total debt of 1.2 lakh crores. ” Singhvi said.
He argued that the benefits of the restructuring should be extended to borrowers who might choose to participate or not to participate in the restructuring. Currently, restructuring according to the Center can only be initiated at the discretion of the lender.
The court rejected Singhvi’s plea for an opinion, but asked her to submit her list of requested relief to RBI so that she could submit her response.
The Center, in its affidavit filed in October, informed the Supreme Court that the government had decided to waive “interest on interest” compounded during the six-month moratorium period authorized by the RBI. However, the interest composition would be removed for loans to MSMEs (Micro, Small and Medium Enterprises) and personal loans up to ??2 crores. Categories include MSME lending, education, housing, sustainable consumption, credit card, automotive consumption, and business loans to professionals up to ??2 crores only.
On May 22, the central bank extended its moratorium on term loans until August 31 as part of the national lockdown due to covid-19. In March, the central bank authorized a three-month moratorium on payment of IMEs and all term loans due between March 1 and May 31.
Never miss a story! Stay connected and informed with Mint. Download our app now !!