New Delhi: Finance Minister Thursday formed a three-member expert committee to look into the problems faced by loan borrowers during the ongoing Covid-19 global pandemic that has severely dented the economic growth and affected the borrowers’ ability to service their debt.
The committee will be headed by former comptroller and auditor general of India Rajiv Mehrishi and will also have Ravindra H. Dholakia, former professor of IIM Ahmedabad and B. Sriram, former managing director of State Bank of India.
In March this year, Reserve Bank allowed banks to offer a three-month moratorium on loan repayment to their customers, which was extended by another three months and expired last month.
However, Uttar Pradesh resident Gajendra Sharma challenged the terms and conditions of the loan moratorium in the Supreme Court and sought a waiver of interest, and also interest on interest during the moratorium period demanded by banks.
“Various concerns have been raised during the proceedings in the matter of Gajendra Sharma Versus Union of India and others, regarding the relief sought in terms of waiver of interest and waiver of interest on interest and other related issues,” the finance ministry said, adding that it has constituted an expert committee to look into the issue.
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The Rajiv Mehrishi committee will assess the impact of waiving of interest and waiving of interest on interest on the COVID-19 related moratorium on the national economy and financial stability.
The extension of loan moratorium beyond six months sharply divided the lenders who opposed the decision but some members in the industry demanded its extension due to the adverse economic impact of the Covid-19.
Reserve Bank had also formed a panel under the leadership of KV Kamath, former chairman and managing director of ICICI Bank to suggest ways to deal with the issue. The KV Kamath report, which submitted its report to the RBI early this week, suggested sector-specific relief to 26 sectors of the economy that have been severely hit by the Covid-19.
The Rajiv Mehrishi committee formed by the finance ministry will also suggest the measures to mitigate financial constraints faced by various sections of the society.
The committee will submit its report within one week to the government.
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