Since the first quarter of calendar year 2020, the Covid-19 pandemic has impacted several countries, including India. This resulted in countries announcing lockdowns and quarantine measures that sharply stalled economic activity. The Government of India initiated a nation-wide lockdown from March 25, 2020 for three weeks which was extended to May 31, 2020 in three phases. Several countries took unprecedented fiscal and monetary actions to help alleviate the impact of the crisis. The Reserve Bank of India (RBI) has announced several measures to ease stress in the financial system, including enhancing system liquidity, moratorium on loan repayments for borrowers, asset classification standstill benefit to overdue accounts where a moratorium has been granted and relaxation in liquidity coverage requirement, among others.
The Indian economy would be impacted by this pandemic with contraction in industrial and services output across small and large businesses. The banking system is expected to be impacted by lower lending opportunities and revenues in the short to medium term and an increase in credit costs. The impact of the Covid-19 pandemic on Bank’s results remains uncertain and dependent on the spread of Covid-19, further steps taken by the government and the central bank to mitigate the economic impact, steps taken by the Bank and the time it takes for economic activities to resume at normal levels. The Bank’s capital and liquidity position are strong and would continue to be the focus area.
Crisis and catastrophe related risks
Market and liquidity