11 , June , 2020
PTI, NEW DELHI: Almost all industries in the country have been suffering due to COVID-19 pandemic but all kinds of loan and contractual transactions cannot be put under the moratorium, the Securities and Exchange Board of India (SEBI) has told the Supreme Court.
SEBI filed an affidavit in this regard in the apex court which had sought its stand on a plea which sought a clarification on whether the RBI's circular regarding moratorium on loan repayment amid the pandemic applies to Non-Banking Financial Corporations (NBFCs) and if real estate firms are eligible for it.
While seeking dismissal of the plea filed by an association of real estate developers, the SEBI said that it appears to be "proxy litigation" where the petitioners have raised grievances and issues relating to NBFCs and Housing Finance Corporations (HFCs) rather than issues relating to their own members.
"That not only the real estate sector but almost all the industries in India have been suffering due to pandemic COVID-19 and as a result of this, it does not imply that all kinds of loan and contractual transactions are to be put to under moratorium," the affidavit said.
Regarding the petitioner's contention that real estate sector is only on the receiving end during lockdown, the SEBI said "there is no restriction upon the real estate Industry to receive and recover money from their customers during lockdown".
It said that on May 13, this year the Ministry of Housing and Urban Affairs had issued an advisory to the state governments to extend the timelines for completion of real estate projects which has been delayed due to the pandemic and also for various statutory compliances under the provisions of Real Estate (Regulation and Development) Act, 2016.
"The net effect of the aforesaid announcement will benefit the real estate developers as there will be an extension of six months for the completion of the project with further option of three months extension," it said.
"It is submitted that there cannot be comparison between benefit granted to one section of the society with the other one as these are need based reliefs," the affidavit said, adding that authorities have come out with various schemes and reliefs in view of the "unprecedented situation" that has arised due to the pandemic.
The apex court had on May 15 issued notices to the Centre, RBI, SEBI and others seeking their responses on the plea.
While hearing separate pleas, the top court had earlier asked the RBI to ensure that its circular on three-month moratorium on loan repayment between March 1 and May 31 is implemented in letter and spirit as it appeared that the banks were not extending the benefit to the borrowers.
On March 27, RBI had issued slew of measures to check financial impact of the nationwide lockdown and had issued a circular giving liberty to all banks and financial institution to allow a moratorium of three months on payment of installments in respect of all term loans outstanding as on March 1, subject to the borrower making such a request.
It had said that repayment schedule for such loans as also the residual tenor would be shifted across the board by three months after the moratorium period.
Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period, the RBI had said.
