ET Now: The SC order on loan moratorium comes in as a good news for the banks as well as for Centre as the forgone interest amount would have made Rs 6 lakh cr. Is it a welcoming move according to you as well?
DK Mittal: Yes, it is a very good move and I think it should have come much earlier but it was a much-needed action. The most honourable statement made by the apex court is that “judges do not have expertise to look into financial matters and courts should not interfere.” Now, I have two comments to make-
One, banks and financial institutions will need a very soft landing, you cannot expect a bank to recover in a few days. You cannot give them leeway for few months and then ask to get back on the track in 10 days. RBI should consider giving them longer time, maybe a time of maybe 180 to 270 days to declare NPAs because the fact remains that Covid is not over and some of the sectors of the economy have been affected so badly that they will take quite some time to recover. RBI should consider giving a landing space to all financial institutions till March 2023.
Second, banks should give two year tenure to every loan, extended repayment time for two years. They should be able to restructure by variable EMI amount which customer should be able to pay as and when the economy recovers. Now, unless we implement these two things, there will be huge problem in the banking sector including NBFCs. Ultimately the economy will suffer-if there is no money to lend. So, I think financial institutions will need a soft landing space which has to come only from the Reserve Bank of India.