Focus: GS-III Indian Economy
Why in news?
The Supreme Court criticised the Centre for “hiding behind the Reserve Bank of India” without making its stand clear on the loan moratorium scheme introduced during the COVID-19 pandemic.
- The court wanted to know whether the deferment of loan interest to prop up borrowers through their financial crisis during the national lockdown would lead to accrual of further interest once the freeze was lifted on August 31.
- Noting that the issue had been pending indecisively for some months now, the court advised the government against adopting a blinkered vision, focussing only on matters of business of banks and not looking to the plight of people financially dented by the “problems created by your lockdown”.
- The court said the government was empowered to take an independent stand under the Disaster Management Act.
- The debate was sparked by the RBI’s response in court that it would be imprudent to go for a forced waiver of interest, risking the financial viability of the banks it was mandated to regulate and putting the interests of the depositors in jeopardy.
- The court had been trying to strike a balance between the interests of the banks and the borrowers.
-Source: The Hindu