Page 23 - Banking Finance May 2020

ARTICLE

balance size of over Rs 3 lakh crore was enough to create
panic in the market. The debacle of multi-state cooperative
bank Punjab and Maharashtra Cooperative Bank (PMC) Bank
and Yes Bank have once again raised the trust issue in the
banking industry. The government, on its part, has also
raised the deposit insurance limit from Rs 1 lakh to Rs 5 lakh
per depositor per bank. In fact, the banks in India are well
capitalized with the exception of few but the recent debacle
has done the damage by jolting the small depositors' trust
in the banking industry.

The resolution of bad loan is stuck
The IBC is a path-breaking law for the banking sector as it is
creating a deterrent in the market for defaulters. But the
new code is yet to see faster resolution of cases. The banks
have made all the NPA provisioning in the books, but the
recovery is still far away. While the NCLT courts are flooded Businesses that are into manufacturing will also take a hit
with cases, there is lack of interest from buyer's especially on export business as the situation remains uncertain. The
global distressed funds because of too many amendments services sector is also slowing down.
in a short period of time and legal challenges at every stage.
The buyers are probably waiting for clearer signals from the Steps taken by Govt. and Banks:
economy, which is on a downhill journey.
Banks came into the corona virus pandemic much stronger
than they went into the global financial crisis, but will the
Fitch Cuts India GDP Growth Forecast To 30-
capital and liquidity buffers they have built be sufficient to
Year Low Of 2% for FY21 see them through the most dramatic economic crash in
Fitch Ratings on Friday said it has slashed India's growth history?
forecast for the current fiscal to a 30-year low of 2 percent,
from 5.1 percent projected earlier, as economic recession The government has started taking steps to keep the MSME
gripped global economy following the lockdown due to the segment afloat. The Reserve Bank of India recently
Covid-19 pandemic. "The initial disruptions to regional introduced Long Term Repo Operations (LTRO) worth Rs
manufacturing supply chains from a lockdown in China as 100,000 crore to help banks increase lending at cheaper
the corona virus spread have now broadened to include local interest rates.
discretionary spending and exports even as parts of China
return to work. "Fitch now expects a global recession this In addition, Finance Minister, Nirmala Sithraman, also
year and recently cut our gross domestic product growth announced the extension of the last date to file belated
forecast for India to 2 percent for the fiscal year ending Income Tax Return for all businesses for the FY 2018-19 from
March 2021 after lowering it to 5.1 percent previously, March 31 to June 30. The deadline for GST returns filing for
which would make it the slowest growth in India over the March, April and May is now June 30.
past 30 years," it said in a statement.
Banks are also being encouraged to keep loans worth Rs
MSME Sector: 60,000 crore ready.
According to a recent GOQii survey, about 26% of businesses 1. Why assemble in India, when we can Make-
surveyed said their sales and purchases have been impacted in-India?
due to the virus outbreak. MSMEs are grappling with Now could be the right time for the Government to roll
problems like low liquidity or cash flow and lack of workforce out sops to MSMEs that manufacture locally. The
as the daily-wagers have gone to their villages. Government eMarketplace (GeM) could be of great use

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