Turning banking on its head

The focus in banking has always been on protecting the depositors. Should the rules be rewritten, giving borrowers precedence?

A string of public interest litigations entertained by India’s highest court on waiver of interest on interest or compounding interest on loans during the six-month moratorium period, which ended in August, has provoked me to take a close look at the business of banking.

The Reserve Bank of India (RBI) initially allowed banks to offer a three-month moratorium for all term loans, and later extended it to August 2020 to alleviate the pain of borrowers hit by the Covid-19 pandemic.

Moratoriums are typically imposed in response to temporary financial hardships. During this period, the borrowers are not required to make any repayment