Loan moratorium: Banks told to credit 'interest on interest' to borrowers, RBI tells SC
New Delhi: Banks, financial and non-banking financial institutions have been asked to take "necessary actions" to credit into the accounts of eligible borrowers by November 5 the difference between compound and simple interest collected on loans of up to Rs 2 crore during the moratorium scheme, RBI has told the Supreme Court.
The Reserve Bank of India (RBI), in an affidavit filed through Assistant General Manager Prasanta Kumar Das, referred to the October 23 additional response of the Ministry of Finance and said the federal bank has also acted in pursuance of that by issuing a notification to banks and FIs recently on refund of extra money to the borrowers.
The central government had earlier told the apex court that the lenders have been asked to credit into the accounts of eligible borrowers the difference between compound and simple interest collected on loans of up to Rs 2 crore during the RBI's loan moratorium scheme by November 5.
"All Primary (Urban) Cooperative Banks/State Cooperative Banks/District Central Cooperative Banks, All All India Financial Institutions and All Non-Banking Financial Companies (including Housing Finance Companies) to be guided by the provisions of the scheme and take necessary actions within the stipulated timeline therein," the RBI said in its recent affidavit.
The top court is scheduled to hear a batch of PILs including the one filed by Gajendra Sharma on October 3 relating to charging of interest on interest by banks on EMIs which have not been paid by borrowers after availing the loan moratorium scheme of RBI during March 1 to August 31.
"I say... Ministry of Finance, Department of Financial Services in view of the unprecedented and extreme COVID-19 situation vide its letter ... has approved a 'scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers in specified loan accounts (01.03.2020 to 31.08.2020)' along with operational guidelines and mechanism for such grant," the RBI official said.
The affidavit, which also contained the decision of the government and the subsequent RBI's circular as annexures, said that all banks, FIs, and housing finance firms have been asked to pass on the benefits of the Centre's decision to eligible borrowers.
Earlier, the Centre has said that the eligible borrowers will be benefitted by November 5 by the lenders after the apex court had come down heavily on it, saying that nothing has been done on the ground to pass on the benefits.
The Ministry of Finance has said that after crediting this amount, the lending institutions would claim reimbursement from the central government.
The government had said that the ministry has issued a scheme as per which lending institutions would credit this amount in the accounts of borrowers for the 6-month loan moratorium period which was announced following the COVID-19 pandemic situation.
On October 14, the apex court had observed that the Centre should implement "as soon as possible" the interest waiver on loans of up to Rs 2 crore under the RBI's moratorium scheme and had said that the common man's Diwali is in the government's hands.
The Centre had earlier told the court that going any further than the fiscal policy decisions already taken, such as waiver of compound interest charged on loans of up to Rs 2 crore for moratorium period, maybe "detrimental" to the overall economic scenario, the national economy and banks may not take "inevitable financial constraints".
The RBI had also filed an affidavit in the apex court saying that loan moratorium exceeding six months might result in "vitiating the overall credit discipline", which will have a "debilitating impact" on the process of credit creation in the economy.
These affidavits were filed following the top court's October 5 order asking them to place on record the K V Kamath committee recommendations on debt restructuring because of the COVID-19 related stress on various sectors as well as the notifications and circulars issued so far on loan moratorium.
It has also said that the apex court's interim order of September 4, restraining classification of accounts into non-performing accounts in terms of the directions issued by the RBI, may kindly be vacated with immediate effect.
The Kamath panel had made recommendations for 26 sectors that could be factored by lending institutions while finalising loan resolution plans and had said that banks could adopt a graded approach based on the severity of the coronavirus pandemic on a sector.
Initially, the RBI on March 27 had issued the circular which allowed lending institutions to grant a moratorium on payment of instalments of term loans falling due between March 1, 2020, and May 31, 2020, due to the pandemic.
Later, the period of the moratorium was extended till August 31 this year.
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Bihar minister Nitin Nabin appointed BJP's national working president
New Delhi (PTI): Bihar Minister Nitin Nabin was on Sunday appointed as the BJP national working president and is likely to eventually succeed JP Nadda as its national president, signalling a generational shift in the ruling party.
Nabin, 45, son of late Nabin Kishore Prasad Sinha -- a veteran BJP leader and former MLA -- is considered dynamic and ideologically rooted, and deeply committed to the organisation, party leaders said.
A five-time MLA, he represents Bankipur assembly constituency in Bihar and has served twice as a minister in the Bihar Government.
His tenures as a minister in Bihar and his role as the party incharge of Chhattisgarh have been truly outstanding and marked by his effective organisational leadership, they said.
The BJP parliamentary board picked Nabin for the post.
"Bharatiya Janata Party's parliamentary board has appointed Nitin Nabin, a minister in the Bihar government, the Bharatiya Janata Party’s national working president with immediate effect," BJP national general secretary Arun Singh said in a notification.
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Nabin, who belongs to the Kayastha community, is likely to succeed incumbent BJP chief Nadda and is one of the youngest leaders to occupy the post, the leaders said.
Nadda, 65, was appointed the BJP President in January 2020 and has already completed his full term. He was granted extensions to lead the party through the 2024 Lok Sabha elections.
Congratulating Nabin on his appointment, Prime Minister Narendra Modi said he has distinguished himself as a "hardworking Karyakarta" and expressed confidence that his energy and dedication will strengthen the party.
"He is a young and industrious leader with rich organisational experience and has an impressive record as MLA as well as Minister in Bihar for multiple terms. He has diligently worked to fulfil people's aspirations.
"He is known for his humble nature and grounded style of working. I am confident that his energy and dedication will strengthen our Party in the times to come. Congratulations to him on becoming the BJP National Working President," PM Modi said on X.
Nabin has also worked extensively for Yuva Morcha. His appointment reflects the BJP’s focus on capable leadership and signals a generational shift, the leaders said.
BJP chief Nadda also greeted Nabin and said he was confident that the party would attain new heights under his leadership.
"I extend my heartfelt congratulations to the dynamic BJP leader from the sacred land of knowledge and culture, Bihar, and Minister in the Bihar Government, Shri Nitin Nabin ji on his appointment as the National Working President of the Bharatiya Janata Party.
"I am fully confident that under the guidance of the esteemed Prime Minister Shri Narendra Modi ji and your leadership, the organisation will reach new heights with the sentiments of nation-building and public service. Heartfelt best wishes for your illustrious and successful tenure," he said on X.
