/Lockdown impact: Support needed to borrowers until cash flows improve, says bankers

Lockdown impact: Support needed to borrowers until cash flows improve, says bankers

Kolkata: Bankers on Friday said that lockdown halted economic activities in the country for over two months and now the borrowers need support till cash flows return to normalcy. Speaking at a webinar organised by BCCI, State Bank of India (SBI) Deputy Managing Director Arijit Basu said 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.

But this is leading to higher liability and of the banks as interest has to be paid on the deposits, Ghosh observed.

NPAs of the banks may also see a spike, he said.

Going by the experience of Bandhan Bank, small ticket borrowers are repaying the loans taken, Ghosh said.

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