The Supreme Court noted on Thursday that credit card users should not be given any benefit of compound interest waiver offered by the Union government, as they are not borrowers. The bench a bench headed by Justice Ashok Bhushan said that credit card users don't have a loan, instead they are purchasing.
"Credit card users purchase things using the cards. They have not availed loans. They should not be given this benefit," the court reportedly said.
SG: banks havs to lodge claim to SBI for which a separate nodal agency is created, they’ll verify, take it from Government and then pay it
— Bar & Bench (@barandbench) November 19, 2020
SG: I am a credit card holder and I received SMS for ex gratia credit
Sc: but do you need it? People like you should not get the benefit
Solicitor General Tushar Mehta on Thursday informed the Supreme Court that Rs 5270 crore has been credited to 13.12 crore accounts in the interest waiver plan so far. The Centre has subsidized compound interest for a 6-month moratorium for all loans up to Rs 2 crore. Mehta submitted before a bench that the government is on top of the matter and it is taking all the necessary steps.
Mehta submitted that pre-COVID defaulters cannot benefit from a fresh resolution framework and the committee for resolution framework for COVID related stress has assessed various sectors. Detailing other measures, he assured the top court that the Disaster Management Authority has done whatever it could.
Mehta told the Supreme Court that it is the responsibility of the banks to credit compound interest waiver for loans up to 2 crores, not for consumers to remind the banks of this scheme.
The Union government requested the top court not to consider further relief to borrowers.
He added that the IBC process has already been suspended since March to stop companies from slipping into bankruptcy. " Will ensure that those who paid during moratorium are not short-changed", submitted Mehta.
Mehta also cited the Kamath Committee's report on restructuring of big loans and submitted that a separate mechanism for restructuring small loans by lending institutions is already there.
The bench queried Mehta, was the Kamath committee's recommendations not meant for big borrowers? Mehta clarified that it was for big borrowers and they are applicable to lending greater than Rs 1,500 cr. The top court will continue to hear the matter next week.
The submissions from the Centre came on scores of pleas filed seeking waiver of interest on interest during the loan moratorium period in the backdrop of the ongoing COVID-19 pandemic.