The SC wants the government to waive it by November 2, 2020.
The hearings will continue and a final verdict is some time away.
The SC seems to be comfortable with the idea of the government picking up the tab for the loss banks would incur by not charging the compound interest on exposures that were allowed a moratorium.
The decision would come as a huge relief for both banks and the Reserve Bank of India (RBI).
The SC is not going to recommend a waiver of compound interest for bigger exposures—of more than Rs 2 crore.
In other words, the government will reimburse banks for compound interest due only from smaller borrowers.