Solicitor General Tushar Mehta, representing the Centre, said that if the banks were to bear this burden, it would necessarily wipe out a substantial and major part of their net worth, rendering most of the banks unviable and raising a very serious question mark over their very survival.
He added that it may not be possible to give the exact percentage to the borrowers who have not availed the moratorium and have deposited instalments in time, and approximately such class would be more than 50 per cent.
Mehta submitted before a bench headed by Justice Ashok Bhushan that this was one of the main reasons why waiver of interest was not even contemplated and only payment of instalments was deferred.
The bench, also comprising Justices R.S. Reddy and M.R. Shah, was hearing a batch of pleas of big borrowers -- from real estate and power sectors -- seeking sector-wise relief amid the pandemic.
"If the interest is waived on all the loans and advances for the moratorium period, with regard to all classes and categories of borrowers, the amount to be foregone would be more than Rs 6 lakh crore," submitted Mehta.
The Centre has insisted that continued payment of interest (including interest on interest) to depositors is not only one of the most essential banking activities, but is a huge responsibility that can never be compromised as most of the depositors are bound to be small depositors, pensioners etc. surviving on the interest from their deposits.
Citing the State Bank of India, Mehta contended that interest amount from borrowers during the moratorium works out to be Rs 88,078 crore whereas the interest payable to the depositors during the said period works out to be Rs 75,157 crore.
Mehta reiterated that any further relief may be harmful to the overall economic scenario. Citing sector-specific relief measures for small and midsized business/MSMEs -- including from sectors such as restaurants and hotels etc. -- Mehta said: "The Central government has promulgated the Emergency Credit-Linked Guarantee Scheme (ECLGS) of Rs 3 lakh crore providing additional credit at lower rate of interest, with 100 per cent government guarantee and no fresh collateral. The scheme has been extended with higher financial limits to 27 Covid-19 impacted sectors, including the restaurant and hotel sector."
The hearing will continue on Wednesday.
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