The Supreme Court (SC) said it is not considering a full interest waiver during the moratorium period.
The SC added that it is limiting the scope of waiver to levy of interest on deferred interest.
The Reserve Bank of India (RBI) had on June 4 said lenders will lose Rs 2 lakh crore if interest is waived during the moratorium period.
“Our query was limited to whether there will be a levy of interest on deferred interest.If RBI travels beyond the query posed there will be many opinions,” the SC said on June 12.
The government will consult RBI in the next three days, to formalise a view. The government added that it will convene a meeting of stakeholders to discuss the subject.
The State Bank of India (SBI) intervened in the hearing, arguing that interest waiver is not feasible.
The apex court deferred the hearing in the case to June 17.
The RBI granted a moratorium on term loans whose instalments are due between March 1 and May 31, which was later extended by three month.
Earlier, the RBI warned the Supreme Court of not allowing a plea seeking waiver of interest for the six month moratorium period on loan repayments, ending on August 31.
The RBI, in its reply to the SC, had estimated that a “forced” waiver of interest would hurt banks by as much as Rs 2 lakh crore, which would have “huge consequences” for stability of the entire financial system.
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Banks are intermediaries, who take deposits from savers and give it as loans to borrowers. From the interest paid by borrowers, they keep a portion for running the bank and pass on the rest as interest to the depositors
In a separate announcement, SBI on Thursday approved to divest 2.1 percent stake in SBI Life Insurance through the offer for sale (OFS) route. In the notice to exchange, SBI proposed to sell more than 2 crore shares in SBI Life to achieve Minimum Public Shareholding of 25 percent
