The 21-day period lockdown would cause pain to lenders, especially in loan for the banks in India as well as all over the world. Banks are concerned about the build up of Non-performing Assets (NPAs) as the disruption caused to business operations and supply chains during the 21-day lockdown period will take time to repair. Reserve Bank of India (RBI) has injected fresh liquidity into the banking system and given banks leeway to deal with potential stress in loan accounts.
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RBI will provide banks some relief during the next three months, but a buildup of bad loans looks inevitable. While moratorium provides temporary relief to borrowers and helps check the NPAs during that period, an extended lockdown is expected to have a significant adverse effect on the economy. accounts from sectors including Micro, Small & Medium Enterprises (MSMEs), airlines, real estate, auto dealers, gems and jewellery, metals among others. Banks are concerned about MSME loans and those extended to manufacturing sectors, such as auto, steel, renewable energy, as those where fresh NPAs are looming.
