The RBI, in a fresh affidavit filed to the Supreme Court,claimed that it is unable to extend loan moratorium beyond the six-month period.
The rationale provided is that such a move “may result invitiating the overall credit discipline which will have a debilitating impacton the process of credit creation in the economy”. The RBI further said thatthe move can “increase the risks of delinquencies post resumption of scheduledpayments”
The RBI feels the threat is not only to the lenders but alsoto the borrowers claiming that any extension beyond the six-months would “exacerbatethe repayment pressures for the borrowers”.
Previously, the Supreme Court had asked the centralgovernment and the RBI to place on record all the notifications and circularsissued till date on loan moratorium in the K V Kamath Committee Recommendationson Debt Restructuring.
The Supreme Court’s direction came after the financeministry approved waiver of ‘interest on interest’ of borrowings under specificsectors.
Proposing a more ‘durable solution’, the ResolutionFramework for COVID19-Related Stress announced on August 6, 2020, the RBI said,‘enables the lenders to implement a resolution plan in respect of personalloans as well as other exposures affected due to Covid19, subject to theprescribed conditions, without asset classification downgrade’
In addition, no new relief can be provided inaddition to the one already announced.