On Thursday, the Finance Ministry in a statement said that to address various concerns raised in the ongoing proceedings in the Supreme Court in the matter regarding the relief sought in terms of waiver of interest and waiver of interest on interest and other related issues, the government has "constituted an Expert Committee for making an overall assessment so that its decisions in this regard are better informed."
The committee includes:
- Rajiv Mehrishi, former CAG of India as the Chairperson
- Dr. Ravindra H. Dholakia, former Professor, IIM Ahmedabad & ex- Member, Monetary Policy Committee of Reserve Bank of India
- B. Sriram, Former Managing Director, State Bank of India & IDBI Bank
The committee, as per the statement, will assess the following:
- Measuring the impact on the national economy and financial stability of waiving of interest and waiving of interest on interest on the COVID-19 related moratorium
- Suggestions to mitigate financial constraints of various sections of society in this respect and measures to be adopted in this regard
- Any other suggestions/observations that may be necessary given the current situation.
"The committee will submit its report within one week. State Bank of India will provide secretarial support to the committee. The Committee may consult banks or other stakeholders, as deemed necessary, for the purpose," the statement said.
The statement comes after the Supreme Court on Thursday ordered an interim extension of loan moratorium till 28 September, the next date of hearing, directing banks to not tag any loans as non-performing assets (NPAs) till further directions.
The apex court granted two weeks to the central government, Reserve Bank of India (RBI) and banks to come up with a concrete stand on their waving on interest charged on non-payment during the 6-month moratorium that ended on 31 August.
The plea being contested is on the issue of the burden of interest chargeable during the loan moratorium granted as COVID-19 relief, which will be charged on interest and principal already due by customers during the 6-month period.
The plea argued that the aim of the moratorium circular was to provide relief on account of a loss of livelihood and income during the nationwide lockdown. If those suffering from the loss of income are unable to pay the monthly equated monthly instalments (EMIs), they surely can't be expected to be able to pay the interest dues, the petition said. The petitioner argued that the imposition of interest burden would have a devastating effect and would violate the right to life and right to livelihood.
Such an interest burden, as per the plea, defeats the very purpose of allowing the relief to customers.