Banking Shares Gain After Top Court Says Moratorium Cannot Be Extended

2021-03-23 08:40:25

Banking Shares Gain After Top Court Says Moratorium Cannot Be Extended

Shares of private and public-sector lenders were trading higher after the Supreme Court provided relief to banks in the loan moratorium case. The top court on Tuesday refused to extend the six-month loan moratorium period offered by the Reserve Bank of India (RBI) last year, saying that it is ‘policy decision’ on the part of the Centre and RBI. Delivering its verdict on a batch of petitions seeking extension of the loan moratorium period and other reliefs, the bench headed by Justice Ashok Bhushan said the top court cannot do judicial review of the Centre’s financial policy decisions unless they are malafide and arbitrary.

Gauge of 12 banking shares on the National Stock Exchange Nifty Bank index advanced over 1 per cent, gauge of PSU Banks advanced 3 per cent and Nifty Private Bank index advanced 1 per cent.

Bank of Baroda was top gainer in the banking space, the stock rose over 3 per cent to Rs 74.70. Bandhan Bank, Punjab national Bank, IndusInd Bank, IDFC First Bank, State Bank of India, Axis Bank and ICICI Bank also advanced 1-3 per cent.

In March last year, the RBI had announced a moratorium on loan instalments due between March 1 and May 31, 2020 and subsequently extended it by three months till August 31, 2020.

The loan relief was meant for personal, housing, education, auto and consumer durables loans, loans to micro, small and medium enterprises (MSME), besides loans to micro, small and medium enterprises (MSME) and credit card dues, subject to applicable conditions.

The top court also said that a complete waiver of interest during the moratorium period could not be granted as banks have to pay interest to account holders and pensioners.

As of 2:06 pm, Nifty Bank index was outperforming the Nifty by rising over 1 per cent compared with a gain of 0.45 per cent in the Nifty.

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