The All-India Bank Depositors’ Association (AIBDA) has voiced concern over the growing demand for waiver of interest on loans under moratorium in the context of the lockdown.
They fear that the banks would pass on the burden of any waiver to the depositors by lowering deposit rates even further. “We are greatly perturbed about the likely ramifications of the loan interest waiver on the banking sector, and on the prudential financial discipline of the borrowers. The most severely hit would be the bank depositors, as banks would inevitably seek to cover their potential or actual loss of interest income through further cut backs in the deposit interest rates,” the association said in a statement.
A PIL, seeking a waiver of interest during the period of moratorium, in the context of Covid-19 pandemic lockdown, has already been admitted by the Supreme Court.
The association said depositors were suffering due to the RBI’s ‘ultra-accommodative’ monetary policy as banks had pared deposit rates sharply as the central bank had cut the repo rate by 115 bps since March. “The AIBDA has formally requested the RBI to freeze the deposit rates,” it said.
The RBI has yet to respond to this request,” the statement said.
