Financial packages in place as early as March, court told
The Centre took strong objection to averments made in the Supreme Court on Thursday that it would not have budged to protect borrowers from financial ruin triggered by the COVID-19 lockdown, had the court not intervened on time.
Appearing before a Bench led by Justice Ashok Bhushan, Solicitor General Tushar Mehta said submissions like that were painted in “political colour”.
Mr. Mehta said financial packages were in place as early as in March, during the advent of the COVID-19 virus, to help citizens sail through the economic backlash.
“We had started immediately with the financial packages in March,” Mr. Mehta emphasised.
The court was hearing individual borrowers, power, industry and business sectors on the compound interest or interest-on-interest pay-back scheme introduced by the government and the Reserve Bank of India (RBI) for borrowers struggling to make ends meet after the expiry of the six-month moratorium period on August 31.
Mr. Mehta said the court should now dispose of the petitions post the implementation of the pay-back scheme by November 5. Any grievances from specific sectors can be addressed directly to the government itself.
“This is a fiscal policy matter. Government is on top of it. Grievance redressal mechanism lies within the system itself. To ask for sector-specific reliefs from the court will not be a remedy available under Article 32 of the Constitution,” Mr. Mehta submitted.
The main petitioner, Gajendra Sharma, who represents individual borrowers in the Supreme Court, has already expressed satisfaction with the government scheme to pay back the difference in the compound interest and simple interest charged during moratorium for eight categories of loans worth up to ₹2 crore. The scheme covers MSME, education, housing, consumer durables, credit card, auto, personal and consumption loans.
“Banking sector may not be able to bear any further financial strain,” Mr. Mehta submitted.
However, senior advocate A.M. Singhvi, for power producers, said there are still loopholes left to plug or the “big borrowers” may go down under.
Mr. Singhvi said the RBI circular of October 26, introducing the pay-back scheme, has created inadvertent exclusions. Highend power producers, struggling under non-payment of ₹1.22 lakh crore of consumer dues, have not been allowed to restructure. He said there is a need to “tweak” the circular to protect the various sectors.
Finally, the court allowed parties to hand over their suggestions to the government and the RBI, so that they could get instructions and respond in time to the court. The parties have been also asked to file written submissions. The court scheduled a hearing next week.
The pay-back scheme was introduced “to bring additional relief” to borrowers.
“The Central Government has directed that all lending institutions shall give effect to the scheme and credit the amount calculated as per the scheme into the accounts of the borrowers by November 5,” the Ministry of Finance had said in a short affidavit in court.
Clause three of the waiver scheme defined “all financial institutions” to include banking companies, public sector banks, cooperative banks, regional rural banks, all India financial institutions, non-banking financial companies, housing finance companies registered with RBI, national housing banks.
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