InvestorQ : What does the latest Supreme Court judgment on NPA classification say?
shrinidhi Rajan made post

What does the latest Supreme Court judgment on NPA classification say?

Answer
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4 weeks ago


While the Supreme Court has reserved its final judgment on the NPA recognition case, it has averred that accounts not declared NPAs as on August 31 cannot be declared as bad loans until the time the entire case was satisfactorily disposed off by the court.

The final judgment is expected on September 10 and there will be moratorium status quo till then. The central government and the RBI have informed the SC that moratorium could be extendable up to 2 years subject to genuine stress and the account not being bad.

The court has been bearing a clutch of petitions pertaining to waiver of interest as well as the waiver of interest on interest. The court has repeatedly stated that interest on interest or the compounding factor was unfair and defeated the entire purpose of the moratorium.

The centre and the RBI have argued that waiver of interest would be a disincentive for borrowers who paid loans on time and hence could go against the basic intent of banking. However, now that the moratorium is extendable, it should come as a relief.