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Deputy Managing Director of State Bank of India (SBI) Arijit Basu said at a webinar organised by BCCI that economic activity had stopped in the first quarter for which the borrowers are facing problems of cash flows. “Repayment of loans is done from cash flows. This problem might creep into the second quarter as well. So there is need for forbearance and support,” Basu said. Despite the RBI announcing regulatory forbearance measures like moratorium on repayment of loans, the borrowers are acting cautiously due to the cost involved.
However, more such support might also lead to an increase in the NPAs in the system, Basu said adding that sectors like tourism, airlines and hospitality will certainly take time to revive. MD&CEO of Bandhan Bank Chandrasekhar Ghosh said that the banking system has seen two shocks in recent times — demonetisation in 2016 and COVID-19 in 2020.
“Both of these have thrown up challenges and opportunities. After COVID-19 and subsequent lockdown, the deposit base of the banks have increased and people are sceptical about withdrawing money from banks”, he said.
