New Delhi: Veteran banker Uday Kotak on Tuesday welcomed the Supreme Court's ruling on loan moratorium and said it is a commercial decision that banks should take.
"Finally, sense has prevailed. This is a commercial decision that must be left to banks," the Managing Director of the Kotak Mahindra Bank said on CNBC TV18.
In its awaited ruling, the SC denied to interfere with the Centre's and Reserve Bank of India's (RBI) decision to not extend the loan moratorium beyond August 31, 2020.
The apex court said it is a policy decision.
However, it directed that no compound or penal interest shall be charged from borrowers for the six-month loan moratorium period, which was announced last year amid the COVID-19 pandemic.
ICRA Vice-President (Financial Sector Ratings) Anil Gupta said the compounded interest for six months of moratorium across all lenders is estimated at Rs 13,500-14,000 crore.
"The government had already announced relief for borrowers having borrowings up to Rs 2 crore which was estimated to cost nearly Rs 6,500 crore to exchequer.
"With announcement of waiver for all borrowers, the additional relief of about Rs 7,000-7,500 will need to be provided to borrowers," Gupta said.
A number of banks, when contacted to seek response on the SC ruling, did not elicit any response.
Read More: We can't extend loan moratorium beyond Aug 31: SC
The SC bench, headed by Justice Ashok Bhushan, said the top court cannot do judicial review of the Centre's financial policy decision unless it is malafide and arbitrary.
The apex court said it cannot interfere with the government's decision to fix priorities for relief during the pandemic which has affected all across the country.
The bench said this in its verdict on a batch of pleas filed by various trade associations, including from real estate and power sectors, seeking extension of the loan moratorium period and other reliefs in view of the pandemic.
Temporary measures, like moratorium introduced to tide over such exigencies like the pandemic, cannot be permanent measures or fixtures, and can only have a limited life- cycle for economic relief, law firm J Sagar Associates said.
J Sagar Associates Partner Uttara Kolhatkar said, "The judicial machinery cannot go beyond its brief. Courts cannot usurp the jurisdiction of decision makers in the garb of judicial review."
He added that the parameters of judicial review must be clearly defined and never exceeded.
(PTI)
