This is also a signal for banks, too, which will have to evaluate their portfolio as well as the possible loss of revenue from these enterprises which will not service their debt. This can be a potential stress point for banks as they would also be simultaneously watchful of home loans where the delinquency rates could tend to increase.
The second pertain to banking where the FM has announced certain waivers of charges on use of debit cards in any automated teller machines (ATM) or the maintenance of minimum balance for a period of three months. This will be helpful for households where people have been confined to homes and would need access to cash to make payments given the precaution taken on using cards given the human touch required on machines.
Third, from the point of view of adherence to MCA rules, the announcement involving flexibility in holding of Board meetings for another 60 days as well as the one regarding independent directors will help companies escape the penalties that go with these clauses given that Directors are not in a position to travel and holding meetings has become impossible under the current conditions of a shutdown.
Hence on the whole the announcements have extended all deadlines from March or April end to June end without quite changing the guidelines of any scheme. This is significant because the government is not really going back on any rule laid down giving more time to comply under the present circumstances.
Going ahead, the markets will look for more substantial announcements in the next package that can provide more support to an economy likely to be hit hard by the virus in terms of employment, loss of production, supply dislocations and uncertainty.
Madan Sabnavis is chief economist at CARE Ratings. Views are personal.