On Thursday, the government, set up a panel under former comptroller and auditor general Rajiv Mehrishi to estimate the impact of ‘waiving of interest and waiving of interest on interest on the COVID-19-related moratorium’ on the economy and financial stability. The panel, which also incorporates Ravindra Dholakia, an ex-member of the RBI’s Monetary Policy Committee, and former SBI managing director B Sriram. It will submit the report in a week.

The finance ministry stated that various concerns have been raised during the proceedings of the ongoing hearing in Honourable Supreme Court of India, in the matters related to Gajendra Sharma Vs Union of India and Others case. This case is regarding the relief sought in terms of waiver of interest and waiver of interest on interest and other related issues. The government has accordingly constituted an expert committee for making an overall assessment so that its decisions in this regard are better informed.

The committee is likely make suggestions on how to “mitigate financial constraints of various sections of society in this respect and measures to be adopted in this regard”. At the same time, it has also been authorised to make any other suggestion or observations that may be essential given the current situation, according to the statement. The panel can consult banks and other stakeholders.

On Thursday, the Supreme Court said that specific inputs with regard to charging of compound interest and credit rating/downgrading during moratorium period shall be obtained, so that appropriate orders and instructions can be issued on the next date of hearing. The Apex court has further added that all the decisions taken by the government of India, RBI and different banks should be placed before it for consideration.

The cessation on not declaring accounts NPAs would be comfortable for those borrowers that were classified standard but past due on February 29. Such borrowers were eligible for moratorium till August 31, but maybe at risk of being declared NPA if they do not start servicing loans now. They can be classified NPA if the overdue period has crossed the 90 days threshold after excluding the moratorium period. Previously, the government-supported Reserve Bank of India’s stand interest couldn’t be waived as it would weaken the financial sector and a one-size-fits-all formula could not be applied to all sectors.