The Supreme Court today adjourned its hearing over the issue of waiving of compound interest on repayment of loans up to Rs 2 crore, as real estate developers sought few days to respond to the government’s plan to waive compound interest on loan repayments during the coronavirus crisis. On Friday, the centre had told the top court it would waive the compounding interest component on small businesses and some other loans related to education and housing, and credit card dues, to help borrowers.
“A lot of facts and figures in the government’s affidavit are without any basis,” realty industry body CREDAI’s counsel told the top court, seeking few days to reply to the government’s affidavit explaining its stance.
The CREDAI or Confederation of Real Estate Developers’ Associations of India – which is the top association of private real estate developers in the country – also disputed the finance ministry’s estimate that waiving off interest on loans to every category would cost banks Rs 6 lakh crore.
A number of associations representing different sectors, such as CREDAI for property developers, are part of the hearings.
According to the government’s filing, submitted to the top court on Friday, the interest waiver will apply for loans taken by micro, small and medium enterprises (MSMEs) for educational, housing, consumer goods and auto loans, and for credit card dues.
For the categories specified by the government, the waiver on interest will be irrespective of whether the borrower has availed of the moratorium.
The government’s decision on Friday, based on recommendation of a government panel headed by former Comptroller and Auditor General Rajiv Mehrishi, marks a shift from its earlier decision to say no to any interest waiver as it would affect banks.
A batch of petitioners in the case had sought a waiver of interest on deferred EMIs – or interest on interest – during the six-month moratorium period granted by the Reserve Bank of India on account of the coronavirus pandemic.
The RBI had granted borrowers an option to delay their EMIs for six months, till August 31, as the coronavirus pandemic-related restrictions pushed the economy into a record 23.9 per cent crash.
The Centre and the RBI have already told the top court that the moratorium can be extended by up to two years.