InvestorQ : Do you see the banks offering interest waiver instead of just moratorium, as directed by the Supreme Court?
diksha shah made post

Do you see the banks offering interest waiver instead of just moratorium, as directed by the Supreme Court?

Answer
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Aashna Tripathi answered.
3 months ago


Firstly, the Supreme Court has not given any direction for interest to be waived. There was a petition filed in the Supreme Court against the concept of moratorium as it does not give any relief. In response to that petition, the Supreme Court had asked the government and the RBI to explain why the interest waiver should not be given instead of just a deferral. The RBI has already explained to the SC that interest waiver would be credit negative for the banks. On June 04, the new CII president, Uday Kotak, also argued against any interest waiver during the moratorium period. According to Kotak, this type of interest waiver could end up becoming an unequal game because the banks still have to pay the depositors but would not earn anything in return. Kotak also agreed with the RBI that it could be credit negative for banks. It must be understood that the current moratorium is only a deferral and the interest for the moratorium period will have to be paid by March 2021 in full. The moratorium is optional.