Introduction
The coronavirus (COVID-19) outbreak is causing widespread concern and economic hardship for consumers, businesses and communities across the globe including the banking industry as a whole. The predicament for Rs 166 lakh crore banking sector is far from over. A few months ago when bank nonperforming assets (NPAs) declined from its peak of over 10 percent of the advances and profitability returned, the telecom AGR (adjusted gross revenue) liability and the Yes Bank debacle hit them hard both in terms of sentiment and loss in market valuations.
The Covid-19 pandemic was like a volt from the blue. Over the last seven years, the banks had braved the first of its kind balance sheet clean up with RBI's asset quality review for stressed loans. The demonetization in 2016 disrupted their focus and business in the interim. The GST came as a shocker as many micro, small and medium enterprises (MSMEs) got wiped out and the banks were forced to restructure many of the loans to MSMEs. Another pathbreaking change, the Insolvency and bankruptcy code (IBC), created a huge provisioning pressure in their books with realization still far from satisfaction. We analyze how prepared the banking sector, after amalgamation, is to weather the Covid-19 storm which is playing out in full force globally.
Challenges: Public sector banks in consolidation mode
Esta historia es de la edición May 2020 de BANKING FINANCE.
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