According to Emkay, bankers believe that the interest waiver relief should be extended only to small retail and enterprise borrowers, who are most affected by the pandemic, and not to large borrowers, who have better repayment capacity and are also eligible for other relief measures such as restructuring. Banks may ask the government or the Reserve Bank of India (RBI) to seek a review of Tuesday’s Supreme Court order, directing the government to pay the compound interest for all loans during the moratorium period. Executives from the non-banking financial company (NBFC) sector on Wednesday said lenders were yet to receive reimbursements for the claims they filed in the first round, when the compound interest was paid to borrowers with loans of up to Rs 2 crore.
In a note, analysts at Emkay Global Financial Services wrote that the banking industry may move to get the apex court order overturned. “As per our discussion with bankers, they suggest that IBA (Indian Banks’ Association)/RBI/Govt should file a writ petition challenging the court directive to waive interest on interest on loans of over Rs 2 crore (except for consolidated exposure),” the report said. According to Emkay, bankers believe that the interest waiver relief should be extended only to small retail and enterprise borrowers, who are most affected by the pandemic, and not to large borrowers, who have better repayment capacity and are also eligible for other relief measures such as restructuring.
Ramesh Iyer, vice-chairman and managing director, Mahindra & Mahindra Financial Services, said all NBFCs had applied for the reimbursement and were yet to get it back. Raman Agarwal, co-chairman, Finance Industry Development Council (FIDC), said this was the case for all lenders. “That is true for everyone, for banks also…Now we have filed our claims through SBI, which was the nodal agency, and all the claims are lying with the government. We haven’t heard of anybody yet being reimbursed. They are processing; it’s going to take some time.”
Lenders themselves have paid the ex gratia amounts to their respective borrowers, and the last date for doing so was November 5, 2020.
Analysts at Icra have estimated the total compound interest for six month of moratorium across all lenders at Rs 13,500-14,000 crore, of which about Rs 6,500 crore was towards the first round. “With the announcement of waiver for all borrowers, the additional relief of ~Rs 7,000-7,500 crore will need to be provided to borrowers,” the rating agency said on Tuesday.
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