The Supreme Court on Thursday said accounts which were not declared as non-performing assets (NPA) till August 31 this year shall not be declared NPA till further orders, offering a temporary relief to stressed borrowers facing hardships because of the pandemic.
While passing its order, a three-judge bench headed by Justice Ashok Bhushan posted the matter for further hearing on September 10. The apex court will examine whether banks and financial institutions can impose a penal interest on interest dues during the moratorium period.
“At the request of Tushar Mehta, learned solicitor general, the matter is adjourned for September 10. Harish Salve, learned senior advocate, submitted that no account shall become NPA at least for a period of two months. In view of the above, the accounts which were not declared NPA till August 31 shall not be declared NPA till further orders,” the bench also comprising Justices R. Subhash Reddy and M.R.Shah said.
The court was dealing with a PIL filed by a businessman Gajendra Sharma challenging the decisions of banks to charge interests and also interest on the accumulated interest during the moratorium period.
A number of associations representing different sectors such as real estate, power, tourism, shopping malls have also intervened in the matter, seeking extension of the moratorium period and also the waiver of interest or at least reducing the percentage to a bare minimum.
Solicitor general Tushar Mehta appearing for the Centre said the government and the RBI were working out various measures to mitigate the hardships faced by different sectors, including the restructuring of stressed assets.
“The impact of Covid-19 is faced by everyone but the impact is different for every sector. The impact is good also on some sectors such as pharma and IT,” Mehta said.
He said the idea of moratorium was to defer repayment to ease the burden caused by the pandemic and lockdown so that businesses can manage working capital. The idea was not to waive off interest.
The effort is that those who are affected by Covid-19 and facing distress get the benefit and those who are defaulters are not able to take benefit, Mehta said.
