The Financial Dilemma Over COVID-19 : An Overview

In the present scenario prevailed & paralyzed over the world including our nation, the economy, finance & fiscal policy & the situation being faced largely is the one major issue after the most important issue of life & sustenance apparently & undisputed. 

The dilemma of Banks & borrowers in the backdrop of RBI Circulations & Regulations have created bit confusion in the minds of all concerned being bit dicey, fishy having ambiguity, contradictions, and apprehensions at fore. To say & understand the policy of deferment of Installments/EMI falling between the lockdown period has been in the public domain but both as a layman or lawyer I understand that it should be applicable to those Accounts wherein EMI is falling amidst this period thickly in entirety however the problem of the Bank is perpetual; as we have confronted in some cases wherein the Account was slipping & falling NPA just after the lockdown is announced. As we all know that any Account is declared NPA automatically by the System of respective Banks once & as it is not serviced since last 3 months or precisely 90 days. 

Now the peculiar situation has arisen that since last almost 70-80 days a customer/borrower is not depositing due amounts for the reason best known to them but coming closure to be tagged as defaulter deliberately or so cannot be said either to be waiting to pay entire dues on the fag last day of falling NPA or was expecting Lockdown to be imposed which was congenital & unforeseen previously so neither can it be concluded that such a lot of borrowers did not or could not deposit due amounts only because of Lockdown nor be it their case that despite having resources they could not deposit amounts but for lockdown. Obviously, such borrowers were well aware of qua the status & consequences of their own Accounts so to take advantage, mileage & privilege of lockdown counted to be falling under such category for entitlement of EMI deferment is neither proper nor fair rather for the humanitarian ground alone understandably. 

However if such situation is allowed to happen considering that the financial the year has been declared to be extended up to June instead of March 2020 so all closure and status of Accounts have to be determined & reflected up to June’20. To my view EMI & Installment of one month or more than one month during this lockdown, period need to be evaluated upon the paying capacity and/or intention to pay off an individual/entity. The readiness & preparedness has to be seen to get them avail this olive branch or escape route. A person/entity cannot or could not or did not deposit their dues deliberately & voluntarily because he/she/it had no provision for it and/or had provision but no intention are two different situations which neither can be equated & evaluated on the same parameters, footings & weighing scale. 

The Lockdown situation has neither brought each & every person equally in terms of repaying capacity rather their financial status remains distinct & accountable to the respective liabilities accrued well before such a situation had arisen. To bring all in one queue and under same umbrella with one simple rule is neither proper nor appropriate to conceive & conclude. To treat deliberate defaulters & defaulters due to force de majure need and has to be seen from different angles & specs. What if even after June 2020 such Accounts are not settled, paid entirely, upgraded which was falling NPA marginally and was on the verge, brink, fence & fringe of it. To my considered opinion the law, rules should be fair to one and all not fair to some & unfair to rest. 

It cannot be tilted & twisted towards the wrongdoers under the guise & garb of liquidity, fiscal, financial disruption in lockdown rather overall record, performance, intention have to be seen & counted. It cannot be concluded that all the persons/entities must & might opt for deferment of payments & EMI so neither can there be any hard & fast decision & rules nor all can be treated equally though placed differently. 

The instances & cases of deliberate defaulters are neither new nor emerged only due to the Corona effect rather such elements existed in all times everywhere so the distinction & differentiation has to be applied & effected otherwise the persons paying honestly, regularly & comfortably in hardships and those not paying earlier & later shall come on the same platform for the time being though whenever calculated it should be quantified all such keeping in mind the background & reason of Accounts been declared NPA or so. Undoubtedly it sounds discrimination loudly as well seen visibly between two lots & categories; relief & rewards for those not paying but still allowing & enjoying the status of their Accounts none NPA, no scare or sword of CIBIL yet whereas another lot who have been paying continuously struggling & managing at all fronts. 

For the Argument sake the factor of interest over interest during such moratorium period comes to the burden for the first lot but nothing for the rescue & relief for those who have paid even in such stress. The excuse of limited banking, problem in deposits are not available as the Banking of all nature are open maintaining the rules of social distancing which is also applicable & available for those who have paid despite all odds & adversities; either deducted from their Accounts or transferred or counter deposits in whatever manner. 

Overall no good reason & pleas are readily available for them not to pay inevitably under such circumstances even unless the intent & purport is clean & clear baring a few genuine cases. Hence, by & large in the long run or for the time being in force, the effect & impact of such circulars vis a vis recovery process under SARFAESI Acts & IBC process have to be seen, judged & applied harmoniously on merit case to case basis not blanketly lest sending the wrong signal, discouraging the genuine & sincere customers & borrowers ultimately resulting in disturbing the banking system devasted having perturbing trend, effects & consequences which would be tough to handle such anomalies as check & balance to maintain equilibrium in time to come with any such common law whenever the situation gets normalcy or declared to be so by the competent Authority.        

This is my personal view, opinion & observation without prejudice however if due to my limited knowledge it is wrongly interpreted I shall be highly indebted is I am corrected logically, legally & arguably.

Written By:
Advocate Ranjay Kumar Sinha
(www.advocatesinha.com/)