Loan Moratorium Case: Top Court Gives Petitioners 1 Week to Reply To Centre’s Decision To Waive Compound Interest On Loan

New Delhi: The Supreme Court today said the centre’s affidavit on waiving “interest on interest” on loans up to ₹ 2 crore, frozen during a six-month moratorium granted because of the coronavirus crisis, was not satisfactory and asked for a fresh version in a week. The affidavit “fails to deal with several issues raised by petitioners,” the court said.

The central government has been asked to consider the concerns of the real estate and power producers. The Supreme Court also noted that “no consequential orders or circulars” were issued by the government or the RBI on enforcing the centre’s decisions. The case has been adjourned till October 13, as real estate developers have sought a few days to respond to the government’s plan to waive compound interest on loan repayments.

On Friday, the centre had told the top court in its affidavit that it would waive the compound interest component on small businesses and some other loans related to education and housing, and credit card dues, to help borrowers. “A lot of facts and figures in the government’s affidavit are without any basis,” realty industry body CREDAI’s counsel, Kapil Sibal, told the top court, seeking few days to reply to the government’s affidavit explaining its stance.

Senior counsel Aryama Sundaram, appearing for real estate developers, told the Supreme Court that the finance ministry’s estimate that waiving off interest on loans to every category would cost banks ₹ 6 lakh crore.

The CREDAI or Confederation of Real Estate Developers’ Associations of India, the top association of private real estate developers in the country, is among a number of representations from different sectors involved in the case.