Centre, RBI oppose loan interest waiver; say strong banks needed for economic recovery

Opposing loan interest waiver, Centre and RBI have told the Supreme Court that strong banks are needed to revive the economy and reconstruct stressed assets. Appearing for Centre and RBI, Solicitor General Tushar Mehta said that a knee-jerk reaction to write off loan interest during a financial crisis will end up weakening banks. Solicitor General pointed out that the COVID pandemic had a varied impact on various sectors of the economy, stating that a one-size-fit-all approach can't be adopted. For instance, pharmaceutical and FMCG industries gained but sectors like real estate, hospitality and tourism suffered the most. Solicitor General also refuted allegations made by petitioners who claimed that the government was hiding behind RBI and behaving like a mouthpiece of commercial banks. Hearing will continue before the top court on September 3 on a batch of petitions seeking waiver of interest on loans during the 6-month moratorium, which ended on September 1. The case before the apex court began after a petition was filed by an Agra based lawyer Gajendra Sharma. A batch of petitions have now been filed by various industry groups and individual borrowers seeking interest waiver on loans during moratorium. Confederation of Real Estate Developers Association of India (CREDAI), Association of Power Producers, Shopping Centres Association of India, Coimbatore Jewellery Manufacturers Association, Chhattisgarh Laghu and Sahayak Udyog Sangh and Pune Hotel Association are among the various petitioners who have sought government's intervention to ensure financial relief during an unprecedented pandemic. Petitioners have argued that if a full interest waiver isn't possible, at least interest rates for borrowers should be brought at par with rates paid by banks to depositors. Claiming that the Disaster Management Act has overriding powers under law, petitioners sought that a sector-wise financial aid plan should be executed by the government. Subscribe To ET Now For Latest Updates On Stocks, Business, Trading | ► https://goo.gl/SEjvK3 Subscribe Now To Our Network Channels :- Times Now : http://goo.gl/U9ibPb The NewsHour Debate : http://goo.gl/LfNgFF To Stay Updated Download the Times Now App :- Android Google Play : https://goo.gl/zJhWjC Apple App Store : https://goo.gl/d7QBQZ Social Media Links :- Twitter - http://goo.gl/hA0vDt Facebook - http://goo.gl/5Lr4mC G+ - http://goo.gl/hYxrmj Website - www.etnownews.com