ICICI Securities: Supreme Court’s ‘Interest On Interest’ Waiver Case - Drifting Away From Base Case Assumptions
(image Source: Supreme Court website)

ICICI Securities: Supreme Court’s ‘Interest On Interest’ Waiver Case - Drifting Away From Base Case Assumptions

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Discussions, observations and interim order in the last two hearings on ‘interest on interest’ waiver case in Supreme Court (SC) are drifting away from our (and street’s) base case assumption of the least likelihood of waiver of ‘interest on interest’.

Also, SC seems to be seeking more specific relief beyond a restructuring framework for a few sectors under litigation.

However, further hearing is deferred to September 28, 2020, and till the time final judgement is delivered, uncertainty and overhang will continue.

Impact analysis - incremental burden of Rs 75-80 billion (7 basis points of loans; less than 4% of pre-provision operating profit).

We have, to the best of our assessment, tried to quantify the impact of waiver of ‘interest on interest’ at an industry as well as financier level working around with few key publicly disclosed variables - namely moratorium proportion, lending yields and product tenure.

Click on the attachment to read the full report:

ICICI Securities BFSI Interest Waiver Impact Analysis 110920.pdf

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.