oppn parties No One Knows Anything About What Relief Is Actually Being Provided To Borrowers

News Snippets

  • Kapil Sibal leaves Congress, fills nomination for Rajya Sabha with SPs backing
  • RBI bans 5 NBFCs as it cracks down on e-lending platforms
  • Hindustan Motors to tie-up with Peugeot to bring out a redesigned version of the iconic Ambassador
  • GST Council to defer rate rejig due to inflation
  • Centre to sell 29.5% in Hindustan Zinc at an expected price of Rs 38000cr
  • Stocks remain negative on Wednesday: Sensex loses 303 points to 53749 and Nifty 99 to 16025
  • IPL: RCB beat LSG by 14 runs and end their dream run. Rajat Patidar scores a brilliant 112. RCB will take on RR to decide who goes through to the finals
  • Delhi Additional district judge Nikhil Chopra says there is no legal right for people seeking to worship deity inside Qutab Minar, says it survived 800 years without worship so "let it survive like that"
  • Punjab chief minister Bhagwant Mann sacks state health minister Vijay Singla over corruption charges. Singla was later arrested by the ACB
  • Protestors burn the house of Andhra minister P Viswaroop and MLA Satish Kumar over renaming of Konaseema district as B R Amberdkar Konaseema
  • Gyanvapi: Varanasi district judge decides to first hear the 'maintainability' plea filed by mosque management
  • Delhivery and Venus Pipes shares list at premium of 10% and 8.7% respectively even when market sentiment was down
  • In a bid to cool edible oil prices, Centre allows duty-free imports of 20 lakh tonnes each of crude sunflower oil and crude palm oil per annum this year and next
  • Centre caps sugar exports to ensure availability of stocks in the domestic markets to cool prices
  • Stock markets get the jitters as RBI signals rate hike and government moves in to control inflation: Sensex tumbles by 236 points to 54052 and Nifty goes down by 89 points to 16125
Yasin Malik of JKLF gets two life terms in terror funding case /////// Kashmir TV artist killed and her nephew injured in a terror attack in Hushroo in Budgam district
oppn parties
No One Knows Anything About What Relief Is Actually Being Provided To Borrowers

By Sunil Garodia
First publised on 2020-10-05 15:15:37

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

At last, the Supreme Court put its foot down and directed the Centre to explain its position in detail within a week  regarding the relief actually being given to borrowers for the interest component of loans during the moratorium period and whether it had accepted and implemented the Kamath committee report. The apex court was left with no option when it found no transparency in the Centre's decisions on the matter. The court said that the affidavit filed by the Centre had failed to "deal with several issues raised by the petitioners".

It criticized the government and the RBI for not taking any concrete action for this. The court said that "no consequential  orders or circulars" have been issued by either the government or the RBI to enforce the decisions purportedly taken by the Centre.

The court has hit the nail on the head. Many small borrowers have started complaining that their credit ratings have been downwardly revised in August and September for their failure to pay loan EMIs although they had availed of the moratorium offer. This is in direct contravention of the Centre’s decision when announcing the moratorium that credit ratings will not be affected. If credit ratings fall, these persons will wither not be able to borrow in future or will have to borrow at a much higher rate of interest.

Then, the Centre had announced that those borrowers who were still not able to pay their back EMIs due to business not picking up would be allowed a one time restructuring of loans. But banks have been refusing requests for restructuring and have even started sending legal notices to borrowers to clear outstanding dues.

It is clear that there is a huge gap between what the government says and what the banks are actually doing. This is mainly because of lack of communication: there is no clear policy regarding the matter and whatever has been decided is on paper only as no orders or circulars have been issued by either the government or the RBI directing the banks to implement the policy, if there is one.

Hence, it is good that the apex court has asked the government to come clean on this. The court must ask the government to specify its policy in black and white, if need be sector-wise. It must ask the government of the RBI to issue immediate orders for banks to implement that policy. It must ask the government to file an action taken report every month for at least six months to monitor whether the policy is being correctly implemented and borrowers are actually getting relief.

It must also direct credit ratings agencies to reverse the ratings downgrade they have done for borrowers in August and September. In fact, the ratings must not be downgraded until the matter is finally decided by the apex court. For, relief for borrowers must also include relief from being branded defaulters and getting their credit ratings downgraded for availing a relief announced by the government.