Various industries recently requested the Supreme Court to direct the Centre and the RBI to substantially lower the rate of interest on loans for the period of the pandemic.
Finding that it would be difficult to get a waiver of interest, or even interest on interest, on loans during the six month moratorium period. Appearing for the real estate sector, senior advocate C A Sundaram informed that, even if the interest is not waived, then it needs to be decreased to the rate at which banks are paying interest on deposits. The industry is in difficulties and loans taken by it would be soon turned into NPAs (Non-performing Assets).
While seeking an extension of the moratorium period till economic activities picked up, Sundaram stated that it would be unwise to allow banks to enjoy unfair profit gaining when all other sectors were facing severe hardship.
For Credai-Maharashtra and the Association of Power Producers, senior advocate K V Vishwanathan said that power generating companies were facing a severe problem in demand that reduced by 15-25% during the moratorium period while power clients had not paid dues of Rs 5 lakh crore.
Senior advocate Ranjit Kumar, stated with theatres and bars closed in malls, there was an insignificant footfall in shopping centers and nearly zero returns for shop owners. He found out a special concession on the interest rate to mall and shop owners.
For small scale industries, senior advocate Ravindra Srivastava requested the court for a sustainable interest rate, while senior advocate Sanjay Hegde said that banks didn’t pass the benefit of lesser repo rate to consumers in 2019 to gain high profits. In this pandemic period, they should not think of profiteering and pass on the benefits granted by the RBI to borrowers by reducing the interest rate on loans, he stated.
For individual borrowers, including those repaying home loans, senior advocate Rajiv Datta said that banks need not take the moratorium as a default period to charge interest on interest. “Profiteering at the cost of individual borrowers in this a pandemic is like Shylock seeking his pound of flesh. Individual borrowers were not defaulting,” he stated. Solicitor general Tushar Mehta will give a reply to the petitioners’ arguments on Thursday.
