The apex court cannot be expected to have economic expertise, it said while delivering its verdict in the case. The Supreme Court also said it won’t debate academic matters of trade and commerce, and that it is not for it to decide if public policy could have been better.
Following the development, Bank of Baroda jumped 4 per cent to Rs 75.50. PNB climbed 2.9 per cent to Rs 39.05. SBI, Federal Bank and IndusInd Bank advanced 2-2.5 per cent. By 11.07 am, all the 12 Nifty Bank constituents were trading higher.
The apex court said that it cannot strike down a policy on grounds that a better policy could have been there. Judges should approach warily on these issues since they are not experts, the court added.
The Centre had earlier submitted before the top court that if it were to consider waiving interest on all the loans and advances to all categories of borrowers for the six-month moratorium period, the amount foregone would be more than Rs 6 lakh crore.
On November 27 last year, the top court had asked the Centre to ensure that all steps be taken to implement its decision to forego interest on eight specified categories of loans paid up to Rs 2 crore in view of the coronavirus pandemic. The eight categories of loans included MSME, education, housing, consumer durables, credit card, automobile, personal and consumption.
The Centre took sector-specific relief measures for the small and mid-sized business/MSMEs including from sectors such as restaurants and hotels.
It promulgated an emergency credit-linked guarantee scheme (ECLGS) of Rs 3 lakh crore, providing additional credit at a lower rate of interest, with 100 per cent government guarantee and no fresh collateral, it had said. The scheme was extended with higher financial limits to 27 Covid-19 impacted sectors, including restaurants and hotels.
A March 27 circular by the RBI had allowed lending institutions to grant a moratorium on payment of instalments of term loans falling due between March 1 and May 31, 2020, due to the pandemic. Later, the moratorium was extended till August 31.
Banking stocks such as Bank of Baroda (down 19 per cent), PNB (down 7 per cent), Kotak Mahindra Bank (down 6.5 per cent), ICICI Bank (dwn 6 per cent) and SBI down (5.8 per cent) have fallen up to 19 per cent in last one month.