Uday Kotak, Executive Vice-chairman and MD of Kotak Mahindra Bank, who is now also President of the Confederation of Indian Industries (CII), has backed the Reserve Bank of India's stance that borrowers who avail moratorium on their bank loans will have to pay the interest accrued during that period.

Kotak said that banks were intermediaries between depositors and borrowers.

"If we have a situation that borrowers get moratorium, banks have an obligation to serve depositors both on principal plus interest," Kotak said.

He said there could not be a one-sided contract where borrowers ask for moratorium on borrowing and expect full interest on deposits too.

"Banks have to serve borrowers but have a bigger duty to serve their depositors, Kotak said , adding that depositors were the core of the banking system, and that their trust must be nurtured.

The RBI in its reply to the Supreme Court on a plea over waiver of interest charges during the moratorium period said a “forced” waiver of interest will hurt banks by as much as Rs 2 lakh crore, which will have "huge consequences" for the stability of the entire financial system.

First Published:Jun 4, 2020 12:55 PM IST