Bank shouldn't declare accounts as NPAs until disposal of pleas seeking moratorium extension: SC

New Delhi [India], September 3 (ANI): The Supreme Court on Thursday directed that the bank accounts should not be declared as non-performing asset (NPA) as on 31 August should not be declared as NPAs until the disposal of the pleas seeking an extension of the moratorium period.
A three-judge bench, headed by Justice Ashok Bhushan, was hearing two petitions seeking an extension of the moratorium period on repayment of loans and to waive off the interest on the repayment of the loan amount in view of the COVID-19 pandemic.
Solicitor General Tushar Mehta, appearing for the Central government, said that the banking sector is the backbone of India's economy and that the government cannot take any decision which can weaken the economy.
"We have decided not to waive interest, but reduce payment pressure," Mehta said.
Advocate Vishal Tiwari, who is one of the petitioners, asked whether three months time period till November 1 will be given to borrowers to approach the banks for rescheduling or restructuring after August 31.
Tiwari also asked if EMI's will be deferred and whether no action will be there in default.
After hearing arguments from all the parties in the matter, the bench passed an order not to declare accounts as NPAs until the disposal of the petitions in the matter.
Earlier, the Central government had submitted that the loan moratorium period may get extended by up to two years in view of the ongoing COVID-19 pandemic. It had also said that writing off interest will weaken banks and economic conditions.
The Reserve Bank of India (RBI) had, in its notification dated March 27, granted a three-month moratorium period on monthly loan installment, and extended the same on May 23, for another three months till August 31, 2020, in view of the economic impact of the COVID-19 pandemic
The top court was hearing two pleas filed by Gajender Sharma and lawyer Vishal Tiwari, seeking directions to extend the moratorium period to help borrowers in deferring their EMI payment on term loans and for waiver of interest on the loan repayment during the moratorium. (ANI)