NEW DELHI: Finding that it would be difficult to get waiver of interest, or even interest on interest, on loans during the six month moratorium period, various industries on Wednesday requested the Supreme Court to direct the Centre and the RBI to substantially lower the rate of interest on loans for the period of freeze.
Appearing for the real estate sector, senior advocate C A Sundaram told a bench of Justices Ashok Bhushan, R S Reddy and M R Shah, “Even if the interest is not waived, then it must be reduced to the rate at which banks are paying interest on deposits. The industry is in dire straits and loans taken by it would soon turn into NPAs (nonperforming assets).”
While seeking extension of the moratorium period till economic activities picked up, Sundaram said it would be unwise to allow banks to indulge in profiteering when all other sectors were facing severe hardship.
For Credai-Maharashtra and the Association of Power Producers, senior advocate K V Vishwanathan said power generating companies were facing a severe crunch as demand had gone down by 15-25% during the moratorium period while power consumers had not paid dues of Rs 5 lakh crore.
Senior advocate Ranjit Kumar, appearing for the Shopping Centres’ Association of India, said with theatres and bars closed in malls, there was insignificant footfall in shopping centres and almost zero returns for shop owners. He sought a special concession on interest rate to mall and shop owners.
Appearing for small scale industries, senior advocate Ravindra Srivastava requested the court for a sustainable interest rate, while senior advocate Sanjay Hegde said banks never passed the benefit of lower repo rate to consumers in the whole of 2019 to garner bigger profits. “When there is a pandemic, they should not think of profiteering and pass on the benefits granted by the RBI to borrowers by lowering the interest rate on loans,” he said.
For individual borrowers, including those repaying home loans, senior advocate Rajiv Datta said banks must not take the moratorium as a default period to charge interest on interest. “Profiteering at the cost of individual borrowers during a pandemic is like Shylock seeking his pound of flesh. Individual borrowers were not defaulting,” he said. Solicitor general Tushar Mehta will respond to the petitioners’ arguments on Thursday.