Neither possible nor desirable to arrive at any one particular formula to deal with financial stress caused by COVID-19: Centre to SC

Issues pertaining to financial stress management and the impact of decisions taken on various financial parameters are "not suited to be decided judicially", the Centre has told the Supreme Court in the loan moratorium case..In asking for sector-wise relief in terms of loan restructuring and waiver of interest, the petitioners and intervenors do not raise any legal issues but merely ask for relief in terms of "additional financial support from the government or regulatory forebearance from RBI and other regulators", the affidavit filed by the Centre states.While the grievances raised by borrowers stand addressed through all the steps taken, schemes introduced and regulatory framework provided for by both the government and the Reserve Bank of India (RBI), the petitioners cannot ask for sector specific relief, the Centre argues. .More so, considering that fiscal decisions taken by the Finance Ministry follow a specific procedure in view of the huge financial impact they have. This aspect, as such, cannot be judicially decided or be subjected to judicial review, the Centre avers. The affidavit states,."The petitioners/interveners cannot pray for sector specific relief of either waiver or restructuring by way of present proceedings under Article 32 of the Constitution of India as the question of such financial stress management measures require examination and consideration of several financial parameters and its impact and are not suited for being judicially decided or be subjected to judicial review.".The Centre's response comes after the Supreme Court, on October 5, sought for additional affidavits detailing the steps taken to deal with the grievances of borrowers with respect to waiver of interest during the moratorium period. The Court had also directed for the Kamath Committee report - which deals with sector-wise relief for COVID-19 related stress caused to the borrowers - to be placed on record..[RBI loan moratorium] File additional affidavits on sectoral relief; place Kamath Committee report on record: Supreme Court to Centre, RBI.In the affidavit filed by the RBI, the banking regulator has highlighted the potential detriment an extension of loan moratorium beyond six months is likely to cause. It also prays for the Court to lift its stay preventing banks from classifying any loan accounts as NPAs with immediate effect. The RBI also underlines the various measures and schemes introduced by the Centre for distressed sectors suffering from structural challenges as well as the Centre's undertaking to bear the brunt of the economic cost of waiving compounded interest levied on small borrowers for loans of up to Rs 2 crore, for the moratorium period..Extension of moratorium beyond six months unsustainable, might vitiate credit discipline and increase delinquency: RBI to Supreme Court.The Centre's fresh affidavit, supplementing the RBI's, highlights the steps it has taken to provide relief for financial stress caused due to the pandemic along with the steps taken by the RBI in first providing for the moratorium and later for the restructuring of loans..The Centre's affidavit also delves into the number of AtmaNirbhar schemes provided for taking care of distressed sectors such as the Power Sector, the Real Estate Sector and Micro, Small & Medium Enterprises (MSMEs)..The Centre also stresses on the RBI's circular of August 6 providing for loan restructuring which enables the lenders to provide tailor-made relief for borrowers depending on the individual situation of each borrower. .While this circular takes care of small borrowers, the Kamath Committee's report has made recommendations for the big borrowers while identifying 26 sectors. The report has laid down parameters for guiding lending institutions to undertake the resolution process which can be done on a case-to-case basis after evaluating multiple factors involved, the affidavit notes..The Centre also enumerates the stimulus packages introduced for various classes of borrowers and submits that going beyond the steps already taken would result in severe detriment to the financial and economic scenario. "National economy or the banking sector may not be able to take the inevitable financial constraints resulting therefrom", the Centre's affidavit states..Thus, the Centre prays for the Court to take note of all the steps taken by all the stakeholders that have discharged their responsibilities effectively, and to not permit the judicial review of these decisions sought by the litigants in this case..The Supreme Court is scheduled to hear the case next week.