Indianomics: SC rejects interest waiver plea; experts discuss implications

The Supreme Court (SC) today offered a partial victory to banks, to Reserve Bank of India (RBI) and the government, as it rejected pleas to extend the 6-month loan moratorium period that was offered by the Reserve Bank last year.

The apex court also ruled that it was not possible to waive off interest charged on loans under moratorium during COVID-19 as banks too have an obligation to pay back depositors and pensioners.

However, it wasn't all a win-win for banks. The court ruled that any interest on interest charged shall be deemed as penal and will have to be refunded. Further, the court forced about Rs 1.3 lakh crore worth assets to be tagged non-performing by the end of this month. Rajnish Kumar, former SBI chairman, NS Vishwanathan, former RBI Deputy Governor, Suresh Ganapathy of Macquarie Capital Securities and Nilang Desai, Partner at AZB and Partners, discussed the impact of the decisions on the banking ecosystem.