The Securities and Exchange Board of India (SEBI) has told the Supreme Court that despite the sufferings of all industries in the country due to COVID-19 pandemic, all the loans, and contractual transactions cannot be put under moratorium.
SEBI filed an affidavit in this regard in the apex court pleading for clarification on RBI’s circular of eligibility of NBFCs and real estate firms on the moratorium.
While seeking dismissal of the plea filed by an association of real estate developers the SEBI said that it has all the earmarks of being “proxy litigation” where the solicitors have raised complaints and issues identifying with NBFCs and Housing Finance Corporations (HFCs) as opposed to issues identifying with their individuals.
“That not only the real estate sector but almost all the industries in India have been suffering due to pandemic COVID-19 and as a result of this, it does not imply that all kinds of loan and contractual transactions are to be put to under moratorium,” the affidavit said.
Concerning the petitioner’s conflict that the real estate sector is just on the less than desirable end during the lockdown, the SEBI said “there is no limitation upon the land Industry to get and recuperate cash from their clients during lockdown”.
It said that on May 13, this year the Ministry of Housing and Urban Affairs had given a warning to the state governments to expand the courses of events for the culmination of land ventures which has been deferred because of the pandemic and for different legal compliances under the arrangements of Real Estate (Regulation and Development) Act, 2016.
“The net effect of the aforesaid announcement will benefit the real estate developers as there will be an extension of six months for the completion of the project with a further option of three months extension,” it said.
“It is submitted that there cannot be a comparison between benefit granted to one section of the society with the other one as these are need-based reliefs,” the affidavit said, adding that authorities have come out with various schemes and reliefs in view of the “unprecedented situation” that has arisen due to the pandemic.
The apex court had on May 15 given notification to the Center, RBI, SEBI, and others looking for their reactions on the plea.
While hearing separate requests, the top court had earlier requested that the RBI guarantee that its roundabout on a three-month moratorium on credit reimbursement between March 1 and May 31 is executed in letter and spirit as it gave the idea that the banks were not stretching out the advantage to the borrowers.
On March 27, RBI had given a slew of measures to check money related effect lockdown and had given circular offering freedom to all banks and budgetary foundation to permit a moratorium of a quarter of a year on an instalment of portions in regard of all term advances remarkably as on March 1, subject to the borrower making such a solicitation.
It had said that reimbursement plan for such loans as likewise the remaining tenor would be moved no matter how you look at it by a quarter of a year after the ban time frame.
Intrigue will keep on accruing on the exceptional segment of the term advances during the moratorium time frame, the RBI had said.