SC verdict on compound interest/penalty refund not to impact banks as govt to reimburse: Yes Securities

Yes Securities, the broking and investment arm of Yes Bank, on Wednesday said the Supreme Court directive on loan moratorium due to pandemic has brought the much needed clarity and there will not be any financial impact on the banks as the compound interest waiver is to be reimbursed by the government. On its verdict on a batch of pleas seeking moratorium extension beyond August 31, 2020, the apex court on Tuesday said it is a policy decision, refusing to interfere with the Centre’s and RBI’s decision to not extend the loan moratorium beyond the limit. However, it observed that the benefit of moratorium should go to all set of borrowers irrespective of the loan amount and asked to refund any amount collected as penal interest and compound interest during March-August 2020. The benefit of moratorium was for loan up to Rs 2 crore by way of deferment of instalment payment in those six months. The Supreme Court said there was no rationale to restrict such relief to loans up to Rs 2 crore only. Yes Securities said the verdict and clarity by the SC is positive for lenders.