RBI seeks vacation of SC stay on classification of NPA accounts

The Reserve Bank of India (RBI) has informed the Supreme Court that its order staying the classification of non-performing asset (NPA) accounts will have huge implications for the banking system if it is not lifted immediately.

The central bank also said that the ruling undermines its regulatory mandate.

RBI had, in March, allowed a three-month moratorium on equated monthly instalments (EMIs) of term and other loans that were due between 1 March and 31 May. The moratorium was later extended till 31 August.

The top court, in an interim ruling on 3 September, had ordered a stay on the classification of NPAs—if not declared as such by 31 August—till further orders.

Meanwhile, the Centre has, in response to a batch of petitions, filed an affidavit in the top court ruling out further relief measures under the loan moratorium scheme.

It said a balanced view of the interests of depositors, borrowers, real estate sector entities and banks, in addition to the financial stability and economic growth of the country, has been taken taken into account while deciding its policy.

In response to a plea on waiving interest/interest on interest, the government said such a move will entail significant economic costs that cannot be absorbed by banks without a serious dent in their financials, which, in turn, will have huge implications for depositors and broader financial stability.

The Centre said it had submitted an affidavit on 2 October in which it had informed the top court about its decision to bear the cost of ‘interest on interest’ for MSME loans and personal loans up to ₹2 crore .

Tap To Explore More : Live Mint

Also Read : CORONA UPDATE : INDIA REPORTS 73,272 CASES IN LAST 24 HOURS, TOTAL INFECTIONS NEAR 70 LAKH

About The Author

Leave a reply

Your email address will not be published.