Even as the benchmark Indian indices are swinging between gains and losses in an otherwise volatile market, PSU banking stocks are seen facing pressure as the hearing begins in the Supreme Court on interest waiver issue on deferred EMIs under moratorium.
At around 11:40 am, Nifty PSU Bank traded lower by 1.44% at 1499.8, while it hit day's low of 1492.6. Constituents from the pack dragging the sectoral index lower are stocks like SBI Bank of India, Union Bank of India, PNB and Canara Bank, with all of the stocks down in trade anyway in the range of 2-4%.
During the hearing Senior Advocate Dutta on behalf of the petitioner says to the SC that by charging interest on interest, bank is considering it as a default, whereas it is not a default from the borrower's end. And instead of providing relief, banks are encashing on the opportunity. Further the Counsel mentions Section 13 of the Disaster Management Act "which provides for loan repayment etc'.
Interest on interest is absolutely and prima facie wrong and they cannot charge it.