Supreme Court: Loans under moratorium till August 31 not to be declared NPAs

New Delhi, 3-Sep-2020

Loan accounts under moratorium period till August 31 will not be declared as non-performing assets till further order, Supreme Court bench headed by Justice Ashok Bhushan said on Thursday. The top court was hearing a batch of petitions seeking a waiver of interest on deferred EMIs during the moratorium period, which was introduced by the Reserve Bank of India (RBI) to ease the burden on existing borrowers in wake of coronavirus pandemic-related restrictions. Banks should not take coercive action against borrowers; we have to protect them, the top court added. The government told the Supreme Court that beneficiaries of the moratorium haven't turned NPAs on September 1. Solicitor General Tushar Mehta, representing the Centre and RBI, had earlier told the Supreme Court that the idea of moratorium was to defer payments due to lockdown and not to waive interest. The Supreme Court said that studies need to be carried out for sector wise on effect of COVID and nobody has applied mind and come to mitigating method sector-wise. Banks are free to restructure loans, but they cannot penalise honest borrowers by charging interest on deferred EMIs under the moratorium scheme, a petitioner said in the Supreme Court yesterday. The Supreme Court will hear the case again on September 10.