BRAND-NEW DELHI: The chairman of the nation’s most significant bank is clear that
financial activity
needs to resume and it is the speed of healing that will determine the damage to the
economy
and bank books. He mentions that any loss to GDP will get distributed to federal government, businesses and indivdiuals and thus impact
banks
In an interview to TOI he mentions what is required.
How much of the loans are likely to develop into NPAs?
Our situation analysis depends on how quickly the
lockdown
is raised and what is the pace of recovery thereafter. If there is a GDP loss it will get distributed amongst the government, corporates and people. Business profits are down. Eventually this gets shown in the balance sheet of banks. How much loans go bad depend upon the speed of recovery.
What is the state of the economy? Is it even worse than the worst-case scenario in the monetary stability report?
The financial stability report has a base case, medium intensity and high intensity scenario. I think we are in between the base case and medium seriousness circumstance. The position will be clearer once we leave the lockdown. One thing that is ending up being clear from the declaration of WHO and other companies is that the World will have to find out to cope with Covid-19 and economic activ