New Delhi: The country’s banking regulator Reserve Bank of India has filed fresh affidavit in the Supreme Court in the loan moratorium case.
In the affidavit, the Reserve Bank of India has said that it is not possible to give more relief to sector affected by the coronavirus pandemic. The banking regulator has also said that it is not possible to extend the moratorium period beyond six months.
The RBI said that a long moratorium exceeding six months may result in vitiating the overall credit discipline which will have a debilitating impact on the process of credit creation in the economy. The RBI further said that the move can increase the risks of delinquencies post resumption of scheduled payments and exacerbate the repayment pressures for the borrowers.
On Monday, the top court had told the government that its response did not contain necessary details and asked the Centre and the RBI to place on record the K V Kamath committee recommendations on debt restructuring in view of Covid-19 related stress on various sectors as well as the notifications and circulars issued so far on loan moratorium.
The apex courts direction came after the finance ministry filed an affidavit on October 2 saying that it has decided to waive compound interest (interest on interest) charged on loans of up to Rs two crore for a six-month moratorium period announced due to the pandemic from individual borrowers as well as medium and small industries.
On a plea by various other sectors like real estate, the government told the Supreme Court that it is not possible to give additional relief apart from what has already been announced.
The RBIs response came after the Supreme Court asked the government to consider giving relief to other classes of borrowers. The court is expected to deal with these issues next week.