The Supreme Court in its verdict on Tuesday said that the total waiver of interest is not possible. It also stated that no direction can be given to the government and Reserve Bank of India (RBI) to announce additional reliefs.

Here’s what experts say about the judgement:

Sunil Srivastava, Former Deputy MD, State Bank of India

It is a very welcome judgment because it respects the responsibility of the regulator for the sector. Exposures up to Rs 2 crore have been covered. Exposures up to Rs 2 crore comprise almost 97-98 percent of the total exposure to the banking sector.

There may be certain sectors that would require special forbearances for which the representation should be made to the RBI through the banks. The court has rightly upheld that this should not be the domain where they are the expertise – it should be with the regulators. So that is a very good move.

RK Bansal, MD, Edelweiss ARC

6 months interest on interest has already been paid by the government in most of the cases. In fact, there was a concern in the overall system that if banks don’t classify the accounts as NPA, it may not reflect the true picture. Analysts and people have been taking pro forma and personally, it impacts our business because without NPA we can’t buy the assets, so it is good judgment. I appreciate that Supreme Court has stood by the financial system.

Sunil Mehta, IBA Chief

We made our stand very clear in the Supreme Court as well as to the government that compounding of interest is a normal banking intermediary function. We compound interest for depositors, the resources side, and for the borrowers also. So one side leaving it will be difficult, but the government at its judgment can definitely come out extending relief to the other sectors.

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(Edited by : Anshul)