State Bank of India’s Chairman Rajnish Kumar has said India’s economy disrupted due to nCoronavirus related issues is picking up from June. Speaking at the SBI Banking and Economics Conclave, Kumar said there is need to wait for three to four months to see the trend of the recovery.“COVID-19 has caused gigantic disruption of the Indian economy along with dislocation of the supply chain. April was the worst month for the country’s trade and commerce. Things had slightly improved in May. The recovery started from June,” Kumar said at the webinar on Friday,July 10. The industrially advanced states such as Maharashtra, Gujarat and Tamil Nadu were the worst affected due to the pandemic worsening the economic environment.SBI is not concerned too much regarding the pile-up in bad debt due to the pandemic and sees no need for a blanket extension of the moratorium for every sector. “I don’t want to sound too optimistic on the NPA front but based on the analysis of our book, I am not over-worried,” SBI Chairman Rajnish Kumar said. While he admitted that NPAs were difficult to predict, considering only data of SBI “it seems to be a very manageable situation”. People are largely paying up, especially in retail. SMEs have also started paying. The case for corporates, however, is interesting as companies have enough liquidity but want to preserve cash for now. Certain sectors definitely need help, especially those that came into the crisis without shedding their leverage. In the past 4-5 years, most companies have shed their leverage, and banks have increased their provision coverage ratio. The 6-month moratorium is in itself a kind of mini-restructuring. Further extension could be sought sector-wise, or on a case-to-case basis, but not for all.
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