With RBI, on its path of “whatever it takes” by providing liquidity to the banks, to pass on the lower interest rate benefit to their customers, but banks are still risk-averse and are not lending away their surpluses. The bank Surpluses doubled from 3.18L Crore on 20th February to 6.9L Crore on 16th April 2020. The banks are already on a slippery turf, with the gross Non-Performing Assets at 9.3% in Sept 19, it is expected to breach 10% by Sept 20 because of the lockdown. Therefore, the trust deficit is already looming in the minds of the banks.
It is said that you can lead a horse to water but cannot make it drink. Therefore, the government has to intervene to absorb the bad assets by providing a guarantee on the loans starting with MSMEs & small industries & the government has to be the spender of the last resort to revive the sentiments of the people. As the government has not much of a legroom, let’s see how they will unfold their cards hopefully by this week.
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