No Loan As NPA Until Further Orders

Ad per the Supreme Court, loans that hadn’t been declared non-performing assets (NPAs) by August 31 should continue to remain free of this classification until further orders, extending relief it had given on September 3. The court wants the government to address two issues — whether interest can be charged on interest and whether credit rating agencies can downgrade a business that’s been hit by the pandemic during the moratorium period. Petitioners contended that banks had started to debit interest as well as interest on interest for the moratorium period. Others argued that credit ratings were also being downgraded. This government has stated that it was alive to the impact of the pandemic on all sectors and had issued separate circulars granting relief to distressed sectors. The court hinted that should the government fail to clarify its stand by September 28, it will go ahead and examine all issues and grant whatever relief required. The government said it was in the process of taking a holistic decision and sought more time to firm it up. The government had earlier rejected a plea for a uniform interest waiver policy on the ground that all loan accounts were different and any relief would be sectoral and on a case-to-case basis. “Specific instructions with regard to charging of compound interest and credit rating/downgrading during moratorium period shall be obtained, so that appropriate order be issued on the next date of hearing,” the court said. “All decisions taken by the government of India, RBI or different banks should be placed before the court for consideration…. Interim orders to continue.”