On July 10, SBI’s chairman Rajnish Kumar commented, “a blanket extension of the deferment benefit is not required after 31 August, making it quite obvious that there is unlikely to be another loan repayment moratorium facility available to the borrowers”. RBI has announced a three-month extension of the loan moratorium deadline to 31 August.
Kumar said, “while it was too early to say if there will be another extension, the Reserve Bank of India (RBI) will have data from all lenders before taking a call. But if you ask me, an across-the-board moratorium is not required anymore. However, certain sectors may need some relief and, based on the data available with RBI, there will be a calibrated response”.
According to the bank’s FY20 annual report, it has ₹5.63 trillion of loans under moratorium. On 5 June, Kumar said, “Of the 9.4 million term loan accounts, 900,000 have not paid any instalment, 700,000 have paid one instalment and the rest have paid two instalments”. And added, “if a borrower has paid two or more instalments, it was not considered a deferment”.
Kumar said on July 10 that in retail loans, RBI noticed that borrowers are hesitant to increase their liabilities and a large number of people are repaying. Adding, “In the last four-five years, a lot of companies have deleveraged and the others have disappeared. For most of the banks, provision coverage ratios have gone up. So, the resilience in the financial system is much higher than it was four years ago”.
In the context of economic situation under Pandemic, he said, “In June there was a sharp recovery. All the feedback that I get from the ground is that definitely in the rural area, the impact has been much less. For some states such as Maharashtra and Tamil Nadu, or industrially-advanced states, the impact of covid-19 is much severe. The virus has become the talk of the town everywhere and there is hardly anyone who can claim that he or she is not impacted by the pandemic. He added,” While projections of the potential impact on the global economy vary widely, there is broad agreement that the economy will contract”.