Home >Opinion >Quick Edit >Under the carpet
Dud loans brushed under the carpet have been the bane of our banking sector.
Dud loans brushed under the carpet have been the bane of our banking sector.

Under the carpet

If the pandemic gets judicially deemed an 'act of God', as our finance minister Nirmala Sitharaman recently called it, then borrowers, too, could seek refuge in the 'force majeure' argument

Borrowers who’ve been losing sleep over punitive action by banks after India’s loan repayment moratorium expired on 31 August have got some relief. On Thursday, the Supreme Court ordered that debt, which wasn’t classified as a non-performing asset by that date, must not be until further notice. This was in response to petitions seeking waivers of interest for the moratorium period, a burden that rendered bank forbearance somewhat hollow.

Those against a retrospective waiver had argued it would be unfair to those who kept up their payments. Also, that it would imperil banks. Those in favour of an amnesty pointed to our prolonged covid crisis. If the pandemic gets judicially deemed an “act of God", as our finance minister Nirmala Sitharaman recently called it, then they, too, could seek refuge in the “force majeure" argument. What the apex court has done, though, would amount to a suspension of a key process of banking: the recognition of loans gone bad. With a credit recast scheme in the works, why this was needed is hard to fathom. Dud loans brushed under the carpet have been the bane of our banking sector. Reality will show up some day.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.

Close
x
×
My Reads Redeem a Gift Card Logout