RBI, Supreme Court, LIVE
RBI, Supreme Court, LIVE
Litigation News

RBI Loan Moratorium Hearings before the Supreme Court [LIVE UPDATES]

Justices Ashok Bhushan, R Subhash Reddy and MR Shah are hearing petitions challenging the RBI's move to charge interest on term loans during the moratorium period introduced in light of the pandemic.

Bar & Bench

The Supreme Court is hearing petitions challenging the Reserve Bank of India's move to charge interest on term loans during the moratorium period introduced in light of the COVID-19 pandemic.

The Bench of Justices Ashok Bhushan, R Subhash Reddy and MR Shah is hearing the matter.

In the last hearing, the Supreme Court ordered banks to refrain from declaring loan accounts that were not NPAs prior to August 31 as Non-Performing Assets (NPAs).

Live updates of the hearing today feature on this page.

Hearing begins.

SG Tushar Mehta tells the Court: Two or three rounds of meeting have taken place and the concerns examined.

(Mehta had earlier sought for a deferment in the hearing saying that consultations are on with Banks)

Senior Counsel Harish Salve for Indian Banking Association (IBA) tells the Court that the immediate concern is that of individual borrowers. Decisions have to be taken through the Finance Ministry and not the RBI.

SC (to Mehta): You have to come up with a concrete plan for all sectors.

Senior Counsel Kapil Sibal for a Real Estates Associations submits that the "downgrading of borrowers is still continuing. Borrowers must be protected against such downgrading."

Senior Advocate Rajiv Dutta for petitioners tells the Court that compound interest is still being charged.

Dutta submits that government needs to make its stand clear, says the restructuring of loans should have been done earlier.

Salve (for IBA): Please don't pass any orders on downgrading today because this is based on many factors. Companies will suffer.

Salve: We were not told about this prayer earlier, had they told us this earlier we would have taken instructions.

SC asks: But what is the problem if that is done (orders on downgrading)?

Mehta: Orders like this can have devastating consequences. We are taking a holistic view.

Salve: There was no prayer made for downgrading.

Sibal: My IA has all those pleadings and this prayer.

Mehta urges for deferment for 2 weeks, says he can reply on that, adds that this is not adversarial litigation.

Senior Advocate V Giri for RBI: Downgrading is done on individual basis. It is important for two weeks time without interim orders.

Sibal: RBI's 2020 circular stipulates prevention of downgrading.

Mehta urges for deferment says the interim order that was passed earlier may be extended.

SC: That order is continuing.

Salve: This has now become adversarial. We (IBA) will file our replies within a week. We can't be told this newspaper said this and said that.

Rohatgi (for SBI): We thought it is not adversarial. Let us file a reply now. We are the biggest Bank

Mehta: I'm still not taking it as adversarial. Petitioners appear to be so.

SC: On the interest issue we have yet to take a decision... But, on the aspect of debiting of interest on interest, we are inclined to pass an order that it may not be debited.

Dutta (for petitioners): We have received letters from Banks stating interest on interest will be charged.

Salve explains: Entire Banking sector functions on compounded interest.

Salve: Moratorium was put forth because of a lockdown... This is not penal interest.

Bench: Compound interest is fine. But can this default interest be charged?

SC to Mehta: We will grant you time, file a reply with concrete position so that the matter is not adjourned again.

Mehta: All this will be considered holistically for all sectors.

Supreme Court defers the hearing till September 28.

SC takes Mehta's and Giri's submission on record about placing all decisions taken by RBI and government on record for consideration.

SC says it will consider other prayers by petitioners also on next date.

Supreme Court clarifies that the interim order passed earlier will continue.

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