Morning Tidings

Tag: Interest

  • SC order on interest waiver: PSU banks may have to bear a loss of ₹ 2,000 crore

    SC order on interest waiver: PSU banks may have to bear a loss of ₹ 2,000 crore

    Meanwhile, the Indian Banks Association (IBA) has written to the government to give compensation to the lenders for the interest waiver.

    Sources said that public sector banks may have to bear the burden of Rs 1,800-2,000 crore arising out of the Supreme Court ruling on the waiver of compound interest on all loan accounts selected for deferral during March-August 2020.

    The judgment involves loans above ₹ 2 crore as loans below it were blanketed on interest waiver in November last year. The cost of the Compound Interest Assistance Scheme for loan moratorium was to the government during the ₹ 5,500 crore 2020-21 and the scheme covered all the borrowers, one of whom did not avail the moratorium.

    According to banking sources, 60% of the borrowers initially took advantage of the moratorium and gradually this percentage was reduced to 40% and collection improved with ease of lockdown. In the case of corporate, it was as low as 25% of public sector banks.

    He further said, banks will provide compound interest waiver for the period when the borrower availed the moratorium. For example, if a borrower has granted a moratorium of three months, there will be an exemption for that period.

    The RBI had announced a moratorium on payment of term loan installments due to the epidemic on March 27 last year between March 1 and May 31, which was later extended to August 31.

    Sources said that this order of the apex court is limited to only those who had taken advantage of the postponement, so the liability of the public sector bank should be less than ₹ 2,000 crore, which according to rough calculations.

    Further, he said, this order does not specify a time limit for disposal of compound interest as compared to the previous time, so banks can devise mechanisms to adjust or settle it.

    Meanwhile, the Indian Banks Association (IBA) has written to the government to give compensation to the lenders for the interest waiver.

    The government will call based on various considerations.

    The Supreme Court last month directed that no compounding or punitive interest be charged from borrowers for the six-month loan moratorium period announced last year amid the COVID-19 pandemic, and that the previously recovered amount is refunded, deposited or Will be adjusted. .

    The apex court refused to extend the decision of the Center and the Reserve Bank of India (RBI) from August 31 last year, saying it was a policy decision.

    Dismissing the petition for full pardon on interest, the court said that such a step would have consequences on the economy. The bench also said that the waiver of interest would affect the depositors. Along with this, the court also dismissed the petition for further relief in the case.

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  • No compounding, punitive interest should be taken from the borrowers during the loan moratorium period: Supreme Court

    No compounding, punitive interest should be taken from the borrowers during the loan moratorium period: Supreme Court

    Supreme Court only. Questioned the justification for limiting compound interest on loans up to 2 crores

    The Supreme Court on 23 March barred banks from compounding interest (interest on interest) or punitive interest on any loan, regardless of the amount, during the moratorium period.

    A three-judge bench of Justices Ashok Bhushan, Subhash Reddy and MR Shah held that the amount taken as compound interest or penal interest should be adjusted in future loan payments.

    However, the court agreed with the Reserve Bank of India (RBI) that the extension of the date of the moratorium was “not viable”.

    The court stated that judicial review on fiscal policies was limited. The court cannot order specific financial relief.

    The court only. Questioned the justification for limiting compound interest on loans up to 2 crore.

    The government introduced the pay-back scheme on October 23, 2020. The repayments of the scheme waived the difference between compound interest and simple interest between March 1 and August 31, with eight categories of loans up to ₹ 2 crore. .

    The eight categories were MSME, education, housing, consumer durables, credit cards, auto, personal and consumption loans. The lending institutions included banking companies, public sector banks, co-operative banks, regional rural banks, all-India financial institutions, non-banking financial companies, housing finance companies registered with the RBI and national housing banks.

    In November last year, the court directed the Center to implement the pay-back scheme.

    However, borrowers had continued to push for the extension of the moratorium and also argued that the entire interest for the moratorium period should be abolished. The petitioners also stated that the 2-crore pay-back scheme does not provide relief to the large borrowers under the impact of the epidemic.

    Settling the case for judgment on 17 December last year, the Indian Banks Association extended the pleas made by the petitioners beyond the financial stress that they had assumed during the epidemic.

    The Center had said that complete relaxation of interest would cripple the economy and banking sector.

    The State Bank of India had requested in support of small depositors who are the “backbone” of the banking system.

    “Small depositors are useless in these proceedings. This is not a case of borrowers versus banks. They are the backbone of the financial system. Banks have to pay interest to these depositors. How can we leave them? What about each loan account?” ? ” 8.5 deposit accounts in the Indian banking system, ”senior advocate Mukul Rohatgi asked in the court on the last date of hearing.

    The RBI had cited 3 circulars for the August 6 circular ‘Resolution Framework for COVID-19-Related Stress’ to indicate that lending institutions, as directed by the policy approved by their respective boards Will create viable resolution plans for eligible borrowers. However, the benefit will be provided only to borrowers due to COVID-19.

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  • In the interest of nobody for any stir for a long time, RSS says on the farm opposition

    In the interest of nobody for any stir for a long time, RSS says on the farm opposition

    The Rashtriya Swayamsevak Sangh said on the ongoing peasant movement, ‘anti-national forces are trying to create an atmosphere of unrest and instability to achieve their political edge in the country’, in an official handbook in the ongoing media. All India House of Representatives in the city on Friday.

    Calling a resolution on the issue, the RSS said: “It is not in anyone’s interest for any kind of movement for a long time. It is also a matter of concern that day to day life is affected due to the movement. ”

    “Discussions are necessary, but with a view to finding a solution… the problem becomes more serious when anti-national and anti-social forces try to thwart ongoing efforts for a solution. The leadership of the protest movement should not allow such a situation to arise… We believe that there is no problem. What is required is an honest effort. In a democracy everyone has the freedom to express his views, but no one can be empowered to create unrest and instability in the country.

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  • China hopes that Quad’s meeting will be ‘conducive to peace’

    China hopes that Quad’s meeting will be ‘conducive to peace’

    Top Chinese, US officials may meet for the first high-level talks with the new administration in Alaska next week

    China’s Foreign Ministry said Beijing expected the first summit of Quad Framework leaders — India, Australia, Japan and the US — on Friday to “adapt” to regional peace and stability “instead”.

    On Wednesday, following Chinese Foreign Minister Wang Yi’s remarks by Chinese Foreign Minister Wang Yi at his annual press conference on March 7, China said that after four turbulent years, under the Biden administration “to explore cooperation with the US” And was “open-minded to deepen” and hopes “the US will move in the same direction and remove all its undue restrictions on bilateral cooperation as soon as possible, creating no obstacle”.

    Without mentioning the Quad, Mr. Wang called it “building small circles in the name of multilateralism”, which was “really ‘group politics’.” He said, “Multilateralism, with its own interests, is still unilateral thinking.” “” Selective multilateralism is not the right choice. “

    Friday’s virtual summit will include Prime Minister Narendra Modi, President Joe Biden, Japanese Prime Minister Yoshihide Suga and Australian Prime Minister Scott Morrison.

    When asked about the summit, China’s Foreign Ministry spokesman Zhao Lijian said that China believes that any regional cooperation architecture should follow the principle of peaceful development and win-win cooperation, which is the current one of the time. Is the trend. “We hope that the countries concerned will take into account the common interests of regional countries, uphold the principles of openness, inclusiveness and win-win cooperation, and do things that are conducive to regional peace stability and prosperity, rather than vice versa. ” They said.

    High level meeting

    Meanwhile, the US and China are preparing for the highest level face-to-face official meeting after the US election, stating that the report could take place early next week. Mr. Biden and Chinese President Xi Jinping spoke for two hours on February 11, and a Chinese delegation was led by the top foreign policy officer, Yang Jiechi, who is a member of the Politburo and director of the Central Committee on Foreign Affairs Commission. Can. , Alaska South China Morning Post Reported. He may be accompanied by Foreign Minister Mr. Wang and meet with his counterparts, Secretary of State Antony Blinken and National Security Advisor Jake Sullivan.

    The report mentioned the selection of two top Chinese officials for the meeting as “Beijing will reflect the importance given by Beijing to rebuilding Sino-US relations” and the meeting in Alaska as “geographic half-point for both sides” from the global. Will be away Dazzle of media ”.

    On the report that the four quad countries were exploring coordination in their supply of vaccines to countries in the region, Mr Zhao, a foreign ministry spokesman, said that China is “a firm advocate of equitable vaccine delivery”. “We have joined COAX [the World Health Organization-backed global initiative] Under which China has delivered an initial 10 million doses for emergency use in developing countries. “So far, China has donated COVID-19 vaccines to 69 developing countries or is in urgent need and is exporting vaccines to 43 countries… There are now many vaccines available worldwide. It is up to each country to decide … ”

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