“We are getting representations from companies to delay loan repayments and we have sought the RBI’s clearance for that. As this is a Black Swan event, we think the companies do have a case,” said a banker.
Securities has estimated that a month’s shutdown will cost about 50 basis points of annual gross domestic product (GDP) of India.
The bankers are also worried about the fact that growth in credit to the industrial sector has moderated to 1.6 per cent because of single-digit growth in medium and large industries at 2.5 per cent and 1.8 per cent, respectively.
Besides, some of the large sectors that account for around 70 per cent share of the overall industrial credit had negative to slow credit growth, which includes infrastructure, petroleum, chemicals, metals and food processing. Moreover, these large industrial segments accounted for a majority of bad loans in the third quarter, thus, further impacting credit growth.
heads said the pandemic could lead to disruption in the March quarter. “The scenario is very bad. There should be a moratorium on principal repayment for two years and interest for six months for corporates. The net present value of the loans also should also be protected by adjusting the rate of interest,” Prabal Banerjee, group finance
director, Bajaj group.
The moratorium should be for high risk services sector, including airlines, airports, hotels, malls, multiplexes, restaurants and retailers. “While some affected companies may move to cut cost, these may not be enough because of inflexible overheads and, therefore, their credit profiles could be impaired,” rating firm CRISIL
warned in a note issued on Thursday.
While COVID-19 might not have a direct impact in some sectors such as steel, gems and jewellery, construction & engineering, and textiles, the current global and domestic economic slowdown will impact demand and realisation.