Moratorium verdict: Prepare for shock when a more realistic picture emerges

Loan Moratorium verdict: It also declared that compound interest will not be charged for the period of moratorium.

The coronavirus (Covid-19) pandemic led to many financial relief measures, which complicates the assessment of banking performance. The Reserve Bank of India (RBI) offered a moratorium on bank loans for the period April-August 2020. In September, the Supreme Court (SC) issued a stay order on a proposal to extend the moratorium. It also directed banks to not tag any bad loans as “NPAs” (Non-performing assets) until and unless the loan was already declared an NPA by August 31.

On Tuesday, the SC delivered a judgement where it refused to extend the moratorium beyond August 2020. It also declared that