The circulars allow individual banks discretion to resolve COVID19-related stress and customise relief to individual borrowers facing the reality of payment of accrued loan interest post the moratorium period.

The circulars allow individual banks discretion to resolve COVID19-related stress and customise relief to individual borrowers facing the reality of payment of accrued loan interest post the moratorium period.

Appearing before a Bench led by Justice Ashok Bhushan on Wednesday, senior advocate Rajiv Dutta said asking borrowers to pay interest on interest accrued during the moratorium period which expired on August 31 is “worse than taking a pound of flesh”.

“I [borrowers] did not default on the loans. Moratorium on EMI was meant as a respite when cash flow is strapped. How can the banks say it is a loss for them? When the country is down under, the banks want to make a profit? This is worse than taking a pound of flesh. Profit of COVID? Give me time to restore my finances, stand up on my legs,” Mr. Dutta appearing for the borrowers community contended.

Mr. Dutta said the RBI is “not an agent of the banks, only a regulator”.

Senior advocate K.V. Vishwanathan, for the power and real estate sectors, said the government and the RBI were going in circles without addressing proportionality and waiver of interests required in an “extraordinary force majeure situation” like the pandemic.

Nerve centre
He said the sectors he represents form the nerve centre of the economy. The moratorium has only postponed the burden.

Senior advocate Ranjit Kumar, for the Shopping Centres Association of India, asked whether the computer-managed banking system has already rendered the loan accounts NPAs with the moratorium having expired on August 31.

Senior advocate Kapil Sibal, for the construction sector, sought a complete waiver of interest for the moratorium period.

Solicitor General Tushar Mehta, for both the Centre and the RBI, said a variety of banks are dealing with a variety of loans and borrowers. The thrust is to revive the economy and sectors. He said the majority of the economy runs on small businesses.

The court will continue the hearing on Thursday.

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