SC seeks RBI reply to relief sought by power producers

SC asks RBI to respond to relief sought by power producers

Solicitor General Tushar Mehta told the court that Rs 5,270 crore has been credited to 13.12 crore accounts in the interest waiver plan so far

Representative image. Credit: PTI Photo

The Supreme Court on Thursday asked the RBI to reply on loan relief sought by the power producers body, as they claimed while moratorium applied on the principal loan, banks were taking coercive steps on other aspects such as guarantees. 

A bench presided over by Justice Ashok Bhushan sought a response from the RBI as senior advocate A M Singhvi called it as "subterfuge happening" by banks. 

The court, however, disposed of a plea by Gajendra Sharma related to charging of interest following the relief announced by the government during the six-month moratorium on loan announced due to the Covid-19 pandemic.

Appearing for the Centre, Solicitor General Tushar Mehta, for his part, told the court that Rs 5,270 crore has been credited to 13.12 crore accounts in the interest waiver plan so far.

The Centre has subsidised compound interest for all loans up to Rs 2 crore. 

He also said that pre-Covid defaulters cannot benefit from a fresh resolution framework and the committee for resolution framework for Covid-related stress has assessed various sectors.

Mehta also said it was the responsibility of the banks to credit compound interest waiver for loans up to Rs 2 crore, not for consumers to remind the banks of this scheme.

Among other measures, he said that the IBC process has already been suspended since March to stop companies from slipping into bankruptcy. 

During the hearing, the bench said that credit card users should not be given any benefit of compound interest waiver, as they are not borrowers. The bench said the credit card users don't have a loan, instead they are purchasing.

Mehta referred to the Kamath Committee's report on restructuring of big loans, and submitted that a separate mechanism for restructuring small loans by lending institutions is already there.

The court put the matter for further consideration next week.