The COVID-19 will impact the banking operations in numerous ways. There will be increase in NPA, probable default of Mudra Loans, Asset Liability mismatch due delay in repayments with simultaneous increase in the withdrawal of deposits by the customers, etc.

1. Webinar on Impact of COVID-19 On Banks
RESURGENT INDIA KNOWLEDGE SERIES PRESENTS
Webinar On “Impact of COVID-19 on banks”
Speakers- Mr Siddheshwar Patra, GM CC- Bank of Baroda
Speakers- Mr Vikas Kumar, GM- Allahabad Bank
Moderated by- Mr K.K. Gupta, Director- Resurgent India Limited
Key Takeaways
General Overview
• The COVID-19 will impact the banking operations in numerous ways. There will be increase
in NPA, probable default of Mudra Loans, Asset Liability mismatch due delay in repayments
with simultaneous increase in the withdrawal of deposits by the customers, etc.
• Regulatory measures like reduction in repo rate and reverse repo rate, additional liquidity in
form of Marginal Standing Facility due to increase of 1 % rate in SLR, CRR reduction, LTRO- 1
lakh crore of stimulus package announced by RBI to be released in tranches.

2. • On the customer side, RBI has given a moratorium of 3 months, deferment of interest for CC
and overdraft limits for 3 months, lending institutions can recalculate drawing power by
reducing the margin or reassessing the working capital cycle, no restructuring during this
period, export bills can be realized from earlier period of 9 months to extended period of 15
months.
• In order to lend without constraints, banks need maximum capital reserves. Capital
conservation buffer has been postponed for another 6 months, which relaxes the terms of
capital reserves. Net stable fund ratio (NSFR) has been postponed to another 6 months which
was supposed to be implemented by 1st April 2020.
• GOI has also come out of support in the economy and is helping in number of ways like
beneficiaries under Jan Dhan Yojana will get Rs 500 for next three months, below poverty line
families will get free gas cylinders for 3 months, women’s self-help group collateral free loan
has increased from Rs 10 lakhs to Rs 20 Lakhs, insurance scheme for front line medical workers,
availability of food, direct fund transfers to people under kisan Nidhi yojana, senior citizens,
PWD & widows will get Rs 1000 for next 3 months.
• Even though rating agencies might downgrade the ratings of some companies/sectors, banks
will continue to keep an open-mind and unbiased view and take independent rational decisions
for lending as per the situation and conduct of the account and company.
• IBA has come out with various suggestions for the benefit of all the banks at large so that
banks are protected from any immediate adversities of COVID-19, which includes, asking for
extension of moratorium and 6 months extension of resolution for stressed assets.
• GOI & RBI should provide some comfort like a partial credit guarantee scheme to urge the
banks to lend investment grade companies and not just above.
• Almost all the banks have come out with a 10% Covid emergency fund, that is available to
existing clients at reasonable terms without any hassle.
• The pricing of the loan is affected by the rating downgrade, as banks have to keep higher
provisions for companies below investment grade as compared to investment grade.
►Watch the webinar here: https://www.youtube.com/watch?v=menMsztxreU