Apex court asks for reconsideration as govt opposes loan interest waiver

telecom weights in mutual fund portfolios as about 37 per cent of the deal was taken up by mutual funds, said Emkay Global Financial Services.

“There was also buying in NBFC, IT services and Pharma. Equity funds continue to trim positions in Banks, Oil & Gas, Capital Goods and FMCG. IT services remains the highest underweight position, while Capital Goods are the biggest over weight, according to Emkay Global.

Top large-cap buys included Bharti Airtel,, Hindustan Unilever, ITC. Bharti Airtel, HUL ( due to GlaxoSmithKline stake sale) and ITC saw highest buying by large-cap funds. Large-cap funds sold heavily into banks, with ICICI Bank, SBI, Axis Bank, HDFC Bank and Kotak Bank being five of the top 10 most sold stocks, according to Emkay Global.

Mid-cap funds bought Balkrishna Industries, HUL and Coromandel International and they sold Cholamandalam Investment and Finance, Jubilant Foodworks and Aarti Industries, Emkay Global said.

The Supreme Court on Wednesday once again asked the Centre and the Reserve Bank of India to consider waiving the "interest on interest" on the loans that were payable during the moratorium period, as it refused to bite the government's argument that any waiver of interest on interest would have serious consequences for the financial health of the banks.

Taking exception to the government's latest position that the waiver of interest on interest on the loan payable during the lockdown-led moratorium period was an issue between the banks and the borrowers, a bench comprising Justices Ashok Bhushan, Sanjay Kishan Kaul and M.R. Shah said that government should not now say that the issue of the compound interest—interest on interest— was between the banks and the customers.

The essence of the court's observations was summed up by Justice

Shah when he said, "Once you fix a moratorium it should serve the purpose you desired… we see no merit in charging interest on interest."

"Central government can't raise its hands in helplessness", the bench said.

Adjourning the matter to the first week of August, the court asked the Centre and the Reserve Bank of India to reconsider their positions on waiving interest on interest for the moratorium period. The court also asked the Indian Banks association (IBA) to consider putting in place new guidelines to address the issue.

Summing up the position of the court, Justice Kaul said, "We are only saying waiver of interest on interest for the moratorium period when pandemic was at its peak. It is a very narrow compass. Not to charge interest on interest for three months."

Apparently trying to justify the charging of interest on interest, also described as compound interest, solicitor general Tushar Mehta said that even the depositors too were getting compound interest as interest earned on their principal amount gets absorbed in the principal amount for the future calculation of interest.

Painting a grim situation that the banks may land into if there was waiver of interest on interest, senior counsel Harish Salve appearing for the Indian Banks Association said the country was still in the tunnel of the pandemic and one does not know when we will come out of it and what would be the scenario at that point of time and the sector-wise priorities.

Saying that the entire issue is premature, Salve said that any economic recovery that may take place would be only in 2022 and 2021 will see a further meltdown.

The top court is hearing a PIL by one Gajendra Sharma who has sought waiver of interest for the three months moratorium period during lockdown as every activity- commercial or otherwise--was at a stand still.