MUMBAI: In the latest filing, RBI asks the Supreme Court to give banks the jurisdiction to classify NPAs. RBI says that this step has been taken to save the nation’s financial system as restrictions on banks to profit borrowers may harm the economy of the country in the COVID-19 pandemic. RBI said that the steps that it took made sure that accounts that were standing before the nation was placed in a lockdown in mid-March would not be classified as non-performing assets or NPAs if the loan takers use moratorium. Moratorium allowed the borrowers to delay repayments until the end of august but with loans continuing to accumulate interests.
After an Indian optician, who was later joined by other borrowers, filed a plea, the court reacted affirmatively and granted the stay. All of the borrowers’ income is said to be affected by the COVID-19 pandemic. Borrowers have said to waiver the “interest on interest” part of the loan charged by the lenders who used the moratorium.
The court is all set to decide on this matter. This will affect not only the borrowers but the banks and the economy of the country as a whole for state-run banks dominates this sector.
RBI has let banks offer moratorium to give borrowers some relief in COVID-19 pandemic. This was implemented on 27th March 2020 for 3 months up to June on loans up to Rs. 2 Cr. Or $275,000 and the period was later extended till August.
RBI has stated that “every regulatory forbearance has its downsides” and all the issues that the petitioners had have been addressed.
In a separate filing, the government told the court further extensions of moratorium and supplementation of relief packages would not be possible.
