“Loan borrowers’ Diwali is in your hands”, Supreme Court tells govt.

‘Why do you need till Nov. 15 to implement compound interest waiver scheme for common man’, court asks govt

The Supreme Court on Wednesday questioned the government’s need to wait a whole month, till November 15, to notify the implementation of a scheme for waiving the compound interest (interest on interest) accumulated during the moratorium against loans worth up to ₹2 crore.

Watch | What does the 3-month moratorium on EMIs mean?

The waiver scheme is meant to “hand-hold small and vulnerable borrowers” whose fortunes have dipped during the lockdown.

“Their Diwali is in your hands”, the court told the government.

The waiver scheme has been proposed for eight different categories, including MSME, education, housing, consumer durables, credit card, auto, personal and consumption loans.

Reserve Bank of India (RBI) had termed the Centre’s resolve an “additional relief” for pandemic-induced financial distress among borrowers.

But the court sounded skeptical on Wednesday.

“Having taken the decision to waive their compound interest for the moratorium period, our only question to you is why do you require a month [till November 15] to bring this scheme into effect? Why do you delay issuing the circular?" Justice Ashok Bhushan asked Solicitor General Tushar Mehta, appearing for the Centre and the RBI.

‘Consider common man’s plight’

Justice M.R. Shah, on the Bench, asked Mr. Mehta to consider the plight of the common man.

“In his mind, the government has already helped him [with the waiver of compound interest]… Now he wants concrete results. When you have already taken a decision, why do you need one month just to issue a circular”, Justice Shah asked.

Mr. Mehta replied that the scheme was itself proof of the government’s concern for the common man. “We have already considered the plight of the common man. That is why we have brought this scheme… We would not gain anything by delaying it. There are complexities involved. November 15 is the outer limit”, he explained.

To this, Justice Shah said the court welcomed the step taken by the government to “take care” of the common man.

“We welcome it, but you need to implement it soon”, Justice Shah said.

Mr. Mehta replied that certain “modalities” need to be worked out.

Justice Bhushan observed, “Modalities will take a month? If you had issued a circular to the banks, they would have taken steps… Till now you have not. You have only told the court”.

Mr. Mehta said the government had detailed the scheme on an affidavit in court. It would not go back on its word.

Senior advocate Harish Salve, for the Indian Banks Association, assured the Bench, also comprising Justice R. Subhash Reddy, that the scheme would be “worked out and done”.

He submitted, “It has to be done. Everything the government has said on affidavit has to be done. There is no question about it”. He said a month’s time may be necessary because there were a large number of borrowers under the ₹2 crore category.

Mr. Mehta said the calculation of interest would also vary.

Chidambaram’s plea

Senior advocate P. Chidambaram, appearing for the Shopping Centres Association of India, said the court seemed to want a clear “statement” from the government and the banks.

“Mr. Chidambaram, we don’t want any statement, we want a circular”, Justice Bhushan reacted.

Mr. Chidambaram then said a message had to be then sent from the court.

“Sorry, but a message has already been given by the government [about its intention to help the small borrowers],” Mr. Mehta interjected.

Senior advocate Rajeev Dutta, for petitioner Gajendra Sharma, sought “one line from the Bench to assure the common man”.

But the Bench refrained from passing any formal order. Instead, the court scheduled a hearing for November 2. The Bench said it would evaluate the steps taken by the government then.

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