9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (4) TMI 190 - HC - Indian LawsRestraint from declaring the account of the petitioner as a Non-Performing Asset (NPA) - non-payment of instalment due - since the instalment that was due on 01.01.2020 was not paid within 30 days, the account of the petitioner was classified as SMA-1 and thereafter since it was not paid within 60 days, the account was classified as SMA-2 - case of petitioner is that instalment for repayment which fell due on 01.01.2020, which is the subject matter of the present petition, could not be paid by the petitioner because of adverse economic conditions brought about by the effects of COVID-19 pandemic. HELD THAT - If the interpretation given by learned counsel for the respondent were to be accepted, then an account which was classified as a Standard Asset as on 29.02.2020, cannot become an NPA post 01.03.2020unless it goes through the process of SMA. Since the account cannot be classified as SMA for instalments falling due post 01.03.2020, where was the question of stipulating a moratorium for classification as a Non-Performing Asset (NPA) - The restriction on change in classification as mentioned in the Regulatory Package shows that RBI has stipulated that the account which has been classified as SMA-2 cannot further be classified as a non-performing asset in case the instalment is not paid during the moratorium period i.e. between 01.03.2020 and 31.05.2020 and status quo qua the classification as SMA-2 shall have to be maintained. The effect of the same would be that for a period of three months there will be a moratorium from payment of that instalment. However, stipulated interest and penal charges shall continue to accrue on the outstanding payment even during the moratorium period. If post the moratorium period borrower fails to pay the said instalment, classification would then automatically change as per the IRAC guidelines. The classification of the account of the petitioner as an NPA on 31.03.2020 could not have been done by the respondent. Accordingly, status quo ante is restored qua the classification of the account of petitioner and the account classification as it stood on 01.03.2020 shall stand restored - Petitioner shall pay on or before 25.04.2020, the instalment which fell due as on 01.01.2020 along with interest accrued thereon till the date of the payment irrespective of the lockdown position. List before the concerned Roster Bench on 04.05.2020.
Issues:
1. Petitioner seeks direction to respondent bank not to declare account as NPA due to COVID-19 impact. 2. Interpretation of RBI guidelines regarding moratorium on loan repayments due to COVID-19. 3. Application of RBI Regulatory Package to borrower's default status before March 1, 2020. 4. Classification of borrower's account as NPA and adherence to IRAC Guidelines. Analysis: 1. The petitioner availed substantial loan facilities from the respondent bank, citing adverse economic effects of COVID-19 on the real estate industry for payment delays. The respondent classified the account as SMA-1 and SMA-2, moving towards NPA due to non-payment of instalments. 2. The petitioner argued for the applicability of RBI guidelines issued in response to COVID-19, emphasizing the moratorium on loan instalments. The petitioner referred to RBI's policy easing financial stress caused by the pandemic, allowing a three-month moratorium on loan payments from March to May 2020. 3. The respondent contended that the RBI guidelines did not apply to defaulting accounts before March 1, 2020. A clarification from RBI highlighted that defaults before March 1, 2020, would not benefit from the moratorium, aligning with current IRAC norms for overdue payments. 4. The court analyzed the RBI Regulatory Package and observed that maintaining the status quo as of March 1, 2020, was the intention, preventing immediate NPA classification for accounts not in default until then. The judgment reinstated the account classification as of March 1, 2020, and directed the petitioner to pay the overdue instalment by a specified date. This detailed analysis covers the issues raised in the legal judgment, focusing on the interpretation of RBI guidelines, classification of accounts, and the impact of COVID-19 on loan repayments.
|
