New Delhi: The government should not prioritise economics over health, the Supreme Court said Thursday as it expressed reservations over the Reserve Bank of India (RBI)’s response to a plea questioning its circular that allowed banks to charge interest on term loan repayment during the moratorium period enforced due to the Covid-19 lockdown.
In an affidavit Wednesday, the RBI had said it was against a forced waiver of interest by banks as the same would affect the financial health of the banks and jeopardise the interests of depositors.
A three-judge bench led by Justice Ashok Bhushan said, “Economic aspect cannot be higher than the health of the people.”
The bench, with Justices S.K. Kaul and M.R. Shah as part, was hearing the PIL filed by Agra-based Gajendra Sharma via video-conferencing. The oral observations were made when the petitioner’s lawyer, senior advocate Rajiv Dutta, argued against the RBI stand.
However, on Solicitor General Tushar Mehta’s submission that he would like to file a consolidated response on behalf of the Union Ministry of Finance and the RBI, the court posted the matter for further hearing on 12 June.
Cat is out of the bag, RBI want banks to earn, says plea
The RBI’s 27 March circular allowing banks to grant a moratorium to borrowers on payment of installments for three months did not serve “economic justice”, said Dutta. According to the petitioner, the circular didn’t offer any relief to the consumers as it allowed interest on the loan amount to accrue. A subsequent RBI order on 22 May raised the moratorium period to six months.
We are deeply grateful to our readers & viewers for their time, trust and subscriptions.
Quality journalism is expensive and needs readers to pay for it. Your support will define our work and ThePrint’s future.
In his petition, Sharma said he was personally aggrieved by the levy of interest by the banks.
“The cat is out of the bag. They (RBI) are saying profitability of bank is prime,” Dutta told the bench, seeking its permission to quote an earlier Supreme Court order in an Air India case. The court had said that the middle-row of the national carrier should preferably be kept vacant in non-scheduled international rescue flights operated to bring back stranded Indians amid the lockdown.
However, the court had allowed the flights with middle-seat occupied till 6 June.
Dutta said the government cannot be allowed to let banks earn while the rest of the country “goes down under”. “I want to file a rejoinder,” he submitted, which the court allowed.
Clarify two issues: SC to government
As the court gave Mehta time until 12 June to file a comprehensive response, it asked him to clarify two issues before it. “We want you to give your stand on two issues – one, no interest during moratorium, and second, on the issue of levying no interest on the interest,” Justice Bhushan told Mehta.
The RBI circular was “detrimental” to a borrower, Justice Shah said. “While on one end you are granting moratorium, but on the other nothing (no relief) on interest. This is more detrimental,” he said. Justice Kaul said the government must consider the petitioner’s case in view of the current situation. “These are not normal times,” he added.
At the outset, the bench took strong exception to the RBI affidavit getting reported in the media before the hearing. Dutta said it was a way to sensationalise the matter, though he didn’t directly accuse the government or RBI for it. The RBI counsel wanted the court to issue notice, but the bench left it with a warning that it should not be repeated.
News media is in a crisis & only you can fix it
You are reading this because you value good, intelligent and objective journalism. We thank you for your time and your trust.
You also know that the news media is facing an unprecedented crisis. It is likely that you are also hearing of the brutal layoffs and pay-cuts hitting the industry. There are many reasons why the media’s economics is broken. But a big one is that good people are not yet paying enough for good journalism.
We have a newsroom filled with talented young reporters. We also have the country’s most robust editing and fact-checking team, finest news photographers and video professionals. We are building India’s most ambitious and energetic news platform. And we aren’t even three yet.
At ThePrint, we invest in quality journalists. We pay them fairly and on time even in this difficult period. As you may have noticed, we do not flinch from spending whatever it takes to make sure our reporters reach where the story is. Our stellar coronavirus coverage is a good example. You can check some of it here.
This comes with a sizable cost. For us to continue bringing quality journalism, we need readers like you to pay for it. Because the advertising market is broken too.
If you think we deserve your support, do join us in this endeavour to strengthen fair, free, courageous, and questioning journalism, please click on the link below. Your support will define our journalism, and ThePrint’s future. It will take just a few seconds of your time.