The Supreme Court on Wednesday pulled up the Centre for not implementing the decision it said it would take, in the last hearing, to waive the interest on interest (compound interest in banking parlance) on loans up to Rs 2 crore to individuals and MSMEs during six months of moratorium from March to August.
It was angry when the government sought a month's time until November 15 to complete certain formalities to implement the relief on loans to help the borrowers tide over the Coronavirus crisis.
Asking why does the government need one month to complete the modalities, the court said: "We don't agree that the government needs so much time."
Justice Ashok Bhushan, heading a 3-judge Bench, said: "It is not in the interest of common man, to keep delaying a decision that has been taken."
The Bench listed the ensuing hearing on November 2, hoping that the government will come back with "appropriate action."
Justice M R Shah even said in zest: "On a lighter side, Mr Solicitor General (Tushar Mehta), their Diwali is now in your hands." Diwali happens to be on November 14 and the banks are intrigued why the government wants the waiver implemented only a day after Diwali.
The Bench was hearing a batch of petitions seeking the interest waiver. Also on board was the affidavit of the Reserve Bank of India (RBI), urging the court to lift the stay ordered in September not to declare the loans as NPAs (non-productive assets) until further orders.
On the government offering to bear the cost of the interest waiver, Justice Shah said: "We welcome the decision of the government to waive the compound interest, but it should have been implemented by now.’’
He went on to chide the Solicitor General: You have to take decisions keeping in mind the smaller borrowers.
The Solicitor General tried to explain that banks have to waive the interest and only then they will be compensated by the government; the calculations will have different modalities as the government will have to ensure that the banks give it a proper format and that takes time.
When a lawyer pointed out that no instructions have been issued to the banks, Justice Bhushan interrupted the S-G: "You have not issued any order to anybody. You should have done so to the banks. He said once the government has taken a decision, there is no need for delaying it further." He even indicated at one stage that "we will pass an order."
"See the plight of the common man. We are not passing orders. Consider the plight of common man... It is a welcome decision to give relief to small people. But some concrete results (are) needed," the presiding judge stressed.
Banks, which are among a large group of petitioners representing different sectors in the case, said the action on concerned loans will be taken "whenever the relief given by the government is implemented."
When senior advocate Harish Salve said the interest waiver will be done, Justice Bhushan shot back: "When? The RBI says this will be done, everyone's saying this will be done. There is no question about it. But when? For these modalities, do you require one month time?"
Salve tried to pacify him, saying that "the complexities are such that it requires time." Justice Bhushan disagreed: "This is not correct. They should implement now."
The Solicitor General read out the government's affidavit of October 2 to argue that every category has a different way of recovery since there is diversity in lending and different modalities are required to be followed.
And for this, consultations between the stakeholders are on.
To this, Justice Bhushan responded: "You have already extended benefits to those who have taken loans up to Rs 2 crore. We are only asking if that has percolated."
Senior advocate P Chidambaram said the Lordship wants a statement from the banks about the categories and the Lordship is anxious to send out a message to the common man. The S-G interjected: "Sorry, your Lordship is not sending a message. The government has already taken the decision.’’
According to the government's affidavit on October 2, the interest waiver will apply to loans taken by micro, small and medium enterprises (MSMEs) or by individuals for educational, housing, consumer goods and auto loans, as also on credit card dues. For the categories specified by the government, the waiver on interest will be irrespective of whether the borrower availed of the moratorium or not.