INSUBCONTINENT EXCLUSIVE:
Banking shares were largely flat on Wednesday, ahead of the Supreme Court's ruling on whether interest should be waived on loan repayments
deferred due to the coronavirus-induced lockdown
The National Stock Exchange's Nifty Bank index - which gauges stocks of 12 major lenders in the country - traded listless with a negative
bias in late morning deals
The Nifty Private Bank index - comprising of shares of private sector lenders - was little changed while the Nifty PSU Bank index was down
0.4 per cent.Last week, the Supreme Court had asked Finance Ministry and Reserve Bank of India to hold a meeting to decide on a waiver of
interest on deferred payments of instalments for loans during the moratorium period, which was announced in wake of the lockdown that began
on March 25.In the 12-scrip Nifty Bank index, half of the stocks moved higher, while the others moved with a negative bias.Bandhan Bank,
HDFC Bank, Kotak Mahindra Bank, Punjab National Bank, Federal Bank and State Bank of India were among the losers
On the other hand, Axis Bank, IDFC First Bank, Bank of Baroda, IndusInd Bank and ICICI Bank were among the gainers."If interest payment has
been deferred for three months, banks should not add that amount to the payable money and charge interest on interest," the Supreme Court
bench, comprising Justices Ashok Bhushan, Sanjay Kishan Kaul and MR Shah, had said last Friday
interest charged on interest by banks.On June 4, the top court had sought the Finance Ministry's reply on waiver of interest on loans during
the moratorium period after the RBI said it would not be prudent to go for a "forced waiver of interest" risking financial viability of the
banks.On May 26, the top court had asked the Centre and the RBI to respond to the plea challenging levy of interest on loans during the
moratorium period.The RBI in its reply told the top court that it is taking all possible measures to provide relief with regard to debt
repayments on account of the fallout of COVID-19 but it does not consider it prudent to go for a "forced waiver of interest, risking the
financial viability of the banks it is mandated to regulate, and putting the interests of the depositors in jeopardy".
