Judicious decision

SC judgment will end uncertainty in the banking system

The Supreme Court’s refusal to extend the loan moratorium period and a total waiver of interest payments is a big relief for both the banking system and the government. An interest waiver on this scale would have significantly impaired the banking system, with wider macroeconomic consequences. The government had earlier submitted before the court that if it were to consider waiving interest on all loans for the six-month moratorium period announced by the Reserve Bank of India (RBI) in view of the pandemic, the amount foregone would be more than Rs 6 trillion. If banks were to bear this burden,