Think of those with lifelong savings of a few lakhs, not just large borrowers: SBI to SC

Representative picture

Representative image | Photo credit: PTI

Key highlights

  • Credit Moratorium Fall: RBI, Indian Banks Association, Urges SC Strongly Not To Provide Further Relief
  • Indian Banks Association: Government responsible for reviving the economy, aid under the Disaster Management Act
  • Indian Banks Association: Aid should be given to those directly affected by disaster

The Reserve Bank of India (RBI) and Indian Banks Association (IBA) argued in the case of the credit moratorium and asked the Supreme Court not to issue further orders on petitions asking for financial assistance.

Senior attorney Harish Salve, who served on behalf of the IBA, stated that private banks are publicly traded companies accountable to their shareholders and cannot be asked to write off loans when private banks deal with solving debts through restructuring according to established norms . He argued that while the real estate sector stalled during the lockdown, it goes against logic to believe that powerful real estate agents and CREDAI will not be able to hear their voices outside the center, serving every sector and not just that those who have moved the Supreme Court must help.

The IBA argued that, while a lack of liquidity constrains banks’ capacities, it would welcome the implementation of the sector-specific eases recommended by the Kamath Committee. When the court asked about government expectations, Salve replied that the Civil Protection Act allowed financial relief to be granted to those directly affected by the disaster, not those not directly affected by it. Salve recalled that not every sector could work from home and noted the need for social security for unemployed workers and families who had lost their breadwinners during the pandemic.

Citing a vacation program for workers launched by the UK, Salve claimed that OTT platforms and home delivery performed well, despite some companies suffering from the pandemic. He opposed the extension of the credit moratorium and debt relief, arguing that the government needs to revitalize the economy, which requires a strong banking sector.

While the RBI argued that there has not yet been a single case in which banks have been apathetic to borrowers’ plight, the State Bank of India (SBI) contended that nameless and faceless little depositors are the backbone of every bank. Former Indian attorney general Mukul Rohatgi, who appeared for SBI, argued that large borrowers of thousands of kroner cannot be helped at the expense of the lifelong savings of some lakhs of small depositors whose deposits make up a large part of the bank’s compound interest obligation. The Apex court will continue hearing the case tomorrow.