The country’s economy, which witnessed a disruption due to the coronavirus outbreak, has started recovering from June, Chairman of State Bank of India (SBI) Rajnish Kumar said today. Speaking at the SBI Banking and Economics Conclave, Kumar said there is a 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. Things had slightly improved in May, while the recovery started from June,” Kumar said at the webinar. The industrially advanced states such as Maharashtra, Gujarat and Tamil Nadu were the worst affected due to the pandemic, he said.
“The partial lockdown announced intermittently across the country is also dislocating the supply chain,” Kumar added. He was asked whether the Reserve Bank of India (RBI) would extend the moratorium on loan repayments till end of the year. The SBI chief said there was “no need for extending it across the board beyond 31 August”.
“Some sectors have been severely affected. I expect the RBI to take a calibrated approach on the issue,” Kumar said. The SBI chief said that the banks had been able to absorb the shock due to the moratorium offered to the borrowers in the wake of the COVID-19 outbreak.
Kumar said the SBI data showed that there was a rise in NPAs due to the coronavirus crisis but it can be “manageable”. People have been cautious about increasing their liabilities by opting for the moratorium, especially in the retail, agriculture and MSME sectors, he said.
“The corporate houses have opted for the moratorium. The intent is to preserve cash. It is not that they were unable to pay,” Kumar said. He is of the view that the most-affected sectors are aviation, hotel and tourism which need help.
The impact of the COVID-19 pandemic is severe than the 2008 global financial problem, the SBI chief said. The coronavirus crisis has led to the contraction of the global economy to a large extent, Kumar added.