INSUBCONTINENT EXCLUSIVE:
MUMBAI: Indian banks will have to brace themselves for a prolonged period of lower profits resulting from a hit in revenues and almost zero
new business due to disruptions induced by Covid-19
allowed deferral of interest/principal payments on term loans and working capital loans for a three month period but secured the banks
interest by allowing them to accrue interest on these loans.
As per the RBI directive, banks will be able to accrue income on these loans
while auditing their accounts and only the payable date of these loans will change
also got a cheer from the RBI on asset quality and loan provisioning fronts, with the regulator allowing rescheduling of payment due dates
Banks are likely to benefit by delayed provisioning rules and deferment in norms to classify bad loans
RBI said in a circular.
Indian banks are already in precarious asset quality and liquidity situations
With the outbreak of Covid-19, the banking sector might witness an adverse impact on credit delivery and asset quality, leading to pressure
on capital adequacy.
According to a CARE Ratings analysis of 38 listed banks, their bad loans increased to Rs 9.4 lakh crore at the end of
Public sector banks alone contributed Rs 7.2 lakh crore to the bad loan pile.