Covid 19 Expected Impact on Financial Institutions

Reserve Bank of India as part of its Regulatory Policies to deal with Covid-19 related financial stress released the Resolution Framework as a special window for onetime restructuring on August 6, 2020, enabling the lenders to help the corporates in better management of their cashflows.

The framework also envisaged setting up of an Expert Committee led by Mr. K. V. Kamath as the Chairperson to recommendations on the required financial parameters with sector-specific benchmarks to be factored in the resolution plans in respect of eligible borrowers.

The Expert Committee has given its recommendation on September 7, 2020, on the sector-specific benchmarks. We are delighted to present our analysis on the recommendation made by the Expert Committee in light of the August 7, 2020 circular of the Reserve Bank of India.


Net Interest Margin

Gross NPAs

Credit Growth

Liquidity Stress

Fee Income


Will decrease owing to depression in interest rates

Will increase after Q2  once the RBI moratorium ends in June

will drastically reduce given corporates will slow down investments and consolidate existing operations

Delinquencies will lead to erosion of CRAR leading to higher stress in the weaker banks further decreasing any potential credit growth

Because of Contraction in trading activities, banking fee income likely to  trend downwards