Loan moratorium case: SC says 'no bank account to be declared as NPA' till plea disposed

In a big relief to bank account holders, the Supreme Court bench headed by Justices Ashok Bhushan and comprising R Subhash Reddy and MR Shah on Thursday, ruled that accounts not termed as Non-Performing Asset (NPA) till August 31 will not be declared as NPA till the case is concluded. Petitioners had sought to waive off interest on interest during the loan moratorium period granted by the RBI due to financial decline amid Coronavirus (COVID-19) pandemic. The next hearing will be held on September 10.

India's GDP crashes to -23.9% in Q1- FY21 due to COVID-19; worst contraction till date

SC stays NPA declaration of bank accounts

Representing the Centre, Solicitor General Tushar Mehta said that Centre has decided not to waive interest, but reduce payment pressure. He said that the banking sector is the backbone of our economy and hence no decision could be taken to weaken the economy. Moreover, the Centre has said that the expert committee will come up with sector-specific guidelines on September 6.

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RBI on COVID moratorium

The RBI has already informed SC that repayment of loans allowed during the coronavirus crisis can be extended by two years. Amid the COVID-19 pandemic, the RBI had allowed banks and other financial institutions to offer a six-month moratorium to all existing individual and corporate term loan borrowers until August 31. Finance Minister Nirmala Sitharaman too has asked bankers to roll out loan resolution schemes by September 15 adding that COVID-19 related distress must not impact their assessment of borrowers' creditworthiness.

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GDP plummets to -23.9%

Due to the prevailing COVID-19 conditions,  India's GDP for the first quarter of FY 21 stood at -23.9% as per data released by the National Statistical Office (NSO) on Monday, making it the worst contraction on record. In May, amid the nation-wide COVID-19 lockdown, India's GDP growth for the January-March quarter (Q4) 2019-20 stood at 3.1%. Overall FY 19-20 GDP stood at 4.2%, hitting an 11-year low. India, currently has extended its lockdown in containment zones till September 30, freeing up most restrictions.

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As per market reports, core sectors' growth stood at - Industries at -381%, Services at -20.6%, Manufacturing at -39.3 %, Trade, Hotels at -47. Agriculture has been the only sector to see growth clocking a 3.4% increase, due to rural sector remaining mostly free from lockdown. CRISIL had predicted that India's fourth recession since independence, the first since liberalisation and perhaps the worst to date, is here.