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This article is written by Indrasish Majumdar, LawSikho Intern. The article has been edited by Ruchika Mohapatra (Associate, LawSikho).

Introduction 

Although the rest of the world is combating COVID-19 on all fronts, the pandemic has had a significant impact on the Indian Banking sector. On 25th March 2020, to stop the pandemic from spreading further, India’s government declared a nationwide shutdown. The pandemic has had a huge effect on industry and life in the world’s most populated democracy. Though the severity of the effect on various industries differs, no sector is immune to its effects. 

The fight against COVID-19 is not just about saving the nation and people; it’s also about ensuring that banking networks meet the needs of the general public and the stock industry is open 24 hours and 7 days a week. Needless to say, a country’s financial sector is at its foundation, and its collapse or recession could result in a slew of problems for developing countries like India. The Reserve Bank of India (RBI), consequently, as the central bank of India, implemented a plethora of steps and friezes following the national lockout, which the paper details and deliberates on. The following paper shall discuss the effects of COVID-19 on the banking sector in India and policies enacted by the RBI (Reserve Bank of India) ever since the onset of the pandemic to ensure the functioning of the banks are not affected. The author in the second part of the paper discusses certain measures implemented by four developed countries, renowned across the world for their robust banking mechanism and how they are coping with the pandemic. In doing so, the author suggests India should incorporate some of the policies, to better handle the consequences of COVID-19. The final section of the paper after identifying the loopholes in the policies of the RBI suggests measures it can adopt, in light of the policies enacted by the other countries mentioned in the paper and also in line with the socio-economic stature of India, to better deal with the pandemic and its repercussions. 

Change in RBI Policy due to COVID-19 

Steps for organizational and market continuity

Before the lockdown was announced in early March, the pandemic had already begun to affect all commercial institutions, regardless of size or sector. RBI issued a notice on March 16th, 2020, “Operational and Business Continuity Measures” including the actions mentioned below to brace banks for all types of unexpected events. 

(a) Revisiting and taking stock of the “Business Continuity Plan (BCP)” and altering guidelines to ensure the continuity of sensitive interfaces and avoid service disruptions because of absence induced by independent instances of infection and protective actions; 

(b) Adopting actions to communicate critical instructions/strategies to staff members and stakeholders at all stages to encourage better response and involvement, as well as sensitising members of the staff regarding precautionary steps to be adopted during the pandemic, as directed by health officials; and 

(c) Utilising digital banking as frequently as possible for supporting clients. The central bank took these actions before the national lockdown began, allowing the banking sector time to plan with the BCP and other initiatives to enable them to meet any potential difficulties. 

Following the lockdown, RBI enforced full relaxations on March 27, April 17, 2020, and May 22, 2020, through multiple notices to ensure regular business operations in the banking sector were not hampered. The RBI governor’s first speech, delivered on March 27, 2020, involved multiple steps, including a three-month suspension on the bank loan and liquidity injection via the TLTRO system. The address of the Governor of the Reserve Bank of India’s (RBI) dated April 17, 2020 was aimed at implementing additional steps to relax financial tension and preserve sufficient liquidity therein. On May 22, 2020, the third address expanded timelines, revised several policies, and adopted new steps such as a cap on “Community Exposures” under “the Broad Exposures System” and relaxed guidelines for “the Consolidated Sinking Fund of State Governments”. The following five steps have been discussed concerning these relaxations: 

a) Steps to Control Liquidity;

b) Stock Sector Metrics;

c) Regulatory measures; 

d) Guidelines on import and export;

e) Techniques on debt management.

Liquidity management 

These steps were applied to ensure that ample liquidity was accessible to all stakeholders, alleviating COVID-19-related liquidity restrictions since banks often are judged by their capacity to satiate debt and cash requirements without suffering losses. 

Long-Term Repos Activities (TLTROs) 

It was determined originally that the Reserve Bank of India to offset the negative effect of instruments restricting cash flow e.g. commercial paper, corporate bonds would organise an auction to target term repos extending to three years for a cumulative sum of 1,00,000 crore of acceptable sizes. 

The RBI expressed its interest to invest tentatively 50,000 crores of increased liquidity to micro and small “NBFC’s” through banks and “MFI’s” in a press statement dated 17th April 2020. However, for the medium and small-sized “NBFCs” and “MFIs” the announcement was not encouraging, considering they came short by almost half of the total capacity envisaged, as reported by RBI in a press statement on April 23, 2020. The passive response of banks in the TLTRO 2.0’s exhibited their unwillingness to lend during the pandemic coupled with the precondition that they should only be investing in “investment grade” may be the reason behind the apathy. A special liquidity program was introduced by the Finance Minister in light of the lack of risk aversion tendency of banks primarily for the MFI and NBFCs amounting to Rs. 30,000 crores. Additionally, as part of the Rs. 20 crore Relief Package announced on May 13th 2020 another Rs. 45,000 crore liquidity influx via “Partial Credit Guarantee Scheme” was announced for the “NBFCs”. 

The above-stated measures will increase the end borrowers credit availability, ideally at cheaper interest rates. Considering the serious business impact and liquidity tension the NBFCs were suffering from as a consequence of COVID-19, the government’s steps would support the financial market. 

The ratio of Cash Reserves

The total number of assets that the banks must hold in reserve, either in the vaults or the RBI, so that in a situation of emergency they can be furnished to bank customers is termed the “Cash Reserve Ratio”. The RBI reduced the CRR by 100 basis points to 3.0 per cent under the prevailing circumstances in a news release dated March 27, 2020 for one year ending on 26th March 2021 channelising 1.37 lakh crore primary liquidity in the financial sector. Additionally, the regular CRR management threshold has been reduced from 90 per cent to 80 per cent until June 26, 2020. In the present extraordinary circumstances, this would offer support for banks’ monitoring standards and treasury workers. 

Policy Rate Corridor (LAF)

The mechanism deployed by the Reserve Bank of India to allow banks to produce more money by lending money to RBI via “reverse repo contracts” or repurchase agreements (Repos) is known as a “liquidity adjustment facility”. LAF is a mechanism to aid banks in adjusting liquidity imbalances by allowing them in the event of an emergency to borrow money. 

Policy Repo Rate and Reverse Repo Rate

As a consequence of the lockdown, consumption has decreased significantly, resulting in surplus liquidity in the financial sector. To alleviate this challenge, the RBI announced on March 27, 2020, that the current policy rate corridor will be increased from 50 to 65 basis points. The reverse repo rate, which is the price at which the federal bank borrows money from domestic commercial banks, was reduced by 90 basis points from 4.90 per cent to 4.00 per cent under LAF. On April 17th, 2020, a memo has released the RBI decided to limit the interest rate from 4.00 per cent to 3.75 rates on fixed reverse repo rates. 

It was said that banks in the reverse repo market have lent up to 8 lakh crores, resulting in an improvement in machine liquidity. As a result, at a meeting with the governor of RBI, some economists proposed abolishing the reverse repo rate and combining it with the “Standing Deposit Facility”. A remunerated facility, SDF, allows banks to lend as much money at a rate lower than the reverse repo rate with RBI. Additionally, the provision of collateral for liquidity absorption is not required by the same. 

The Monetary Policy Committee (MPC) unanimously decided to lower the policy repo rate to sustain the stimulative monetary posture so long it is essential to revive growth whilst limiting inflation within the range as specified by RBI. Consequently, MPC has agreed to cut the policy repo rate from 4.40 per cent to 4.00 per cent under LAF, as per an executive order on May 22, 2020. Effective from May 22, 2020, the RBI’s Standing Liquidity Framework (collateralized liquidity benefit) for Primary Dealers (PDs) will be implemented at the modified repo rate of “4.00 per cent”. As a result, the LAF’s reverse repo rate was changed to 3.35 per cent. The Reserve Bank of India has agreed to retain its accommodative posture so long as it is needed to sustain financial development and alleviate the repercussions of COVID-19. Instead of moving to the RBI, banks would be required to bring excess funds into profitable economic sectors in the manner of loans and deposits.

Bank Cost and Marginal Standing Service

The “marginal standing facility (MSF)” is a platform that allows banks to borrow from the Reserve Bank of India (RBI) during a crisis when interbank liquidity is depleted, also referred to as “overnight borrowing”. MSF was increased by the RBI from 2% to 3% of SLR (Statutory Liquidity Ratio), which requires banks to retain liquid assets such as gold and currency. This translates to a 100-basis-point rise until 30th June 2020. 

The bank rate (payable for lending funds to commercial banks governed by long term monetary policies) and the MSF rate have been reduced to 4.25 per cent from 4.65 per cent vide notification dated May 22nd, 2020. As a result, banks are likely to be in a stronger position to utilise this facility, allowing them to make funds more accessible to the needs of people. 

All India Financial Institutions Refinancing Facilities (AIFIs) 

The Reserve Bank of India in a notification dated April 17th 2020 issued refinancing facilities worth 50,000 crores to “AIFI’s” of which 25,000 is to be issued to “NABARD”, 15,000 crores to “SIDBI” and 10,000 to “National Housing Fund”. In addition to depending on internal capital, AIFIs collect capital from the market via methods prescribed by the RBI. In a gazette notification dated 22nd May 2020 the central government decided to reissue the 15,000 crores refinance package issued to “SIDBI” for another 90 days at the end of the 90th day. The decision was made to relieve the burden created by COVID-19’s cash flow fluctuations and to fulfil sectoral credit requirements at a period when these entities are having trouble accessing the business. Coupled with TLTRO 2.0 the decision was aimed to meet the liquidity needs of “NBFCs”, “HFCs” and “MFIs”. However, the government in response to the outcome of TLTRO 2.0 enacted a “Special Liquidity Policy” of 30,000 crores and “Selective Guarantee Scheme 2.0” of 45,000 crores for the “NBFCs” for purposes of easing credit flow. 

Regulatory interventions

These steps were put in place to alleviate the strain of debt service caused by COVID-19 disturbances and to maintain the sustainability of profitable companies. 

Payment rescheduling : term loans and capital expenditures services 

The RBI declared a policy on March 27, 2020, enabling all financial institutions, co-operative or commercial, AIFIs, and NBFCs to offer a three-month suspension on all loan amounts and working capital resources on clearance of all pending instalments as of March 1, 2020. In light of the lockdown extensions and ongoing distortion caused by the pandemic, the RBI had agreed to allow financial institutions to prolong the embargo on term loan instalment payments for another three months, from June 1 to August 31, 2020.

As a result, the payment plan and remaining tenor can be adjusted by another three months around the board. During the moratorium period, interest will begin to accumulate on the remaining portion of the bank loan. This initiative would significantly reduce the pressure on different markets, including investors, who would be willing to concentrate on quicker project implementation, as well as others who spend EMIs or use credit cards. 

Working Capital Finance 

In the case of working capital facilities, the RBI has increased the exemption duration for interest repayment by three months, to August 31, 2020, via a letter issued on May 23, 2020. Lenders will also convert accumulated debt on working capital investments into a supported interest credit facility during the deferment term, as well as readjust the ‘drawing capacity’ by – margins until August 31, 2020, and/or reevaluating the working capital duration up to an extended date until March 31, 2021.

The above-stated measure would offer banks a lot more power in terms of making informed choices and handling various markets differently based on how COVID-19 impacts them. It is also worth mentioning that there would be minimal effect on the recipients’ financial records and the funding agencies will not deem this a default for the sake of supervisory advertising and reporting to “credit information providers” (CICs). 

Provisioning 

If banks try to extend the moratorium on any loans other than NPAs, the RBI has ordered that they allow a 10% additional provision, which will be phased in over two quarters, completing in March 2020 and June 2020, respectively.  A concern emerged soon after as to whether provisioning could be allowed for all SMA transactions. RBI’s senior regulation officers explained that provisioning could only be accepted for loans with principal or payments of interest overdue between 61 and 90 days as of March 1, 2020, i.e. SMA-2 accounts, in a discussion with bank CEOs. 

It’s worth noting that as a consequence of this initiative, many private banks have been able to accumulate sufficient collateral fund buffers to the point where, if the pandemic persists, the balance will be able to cover some potential incidents. Not all banks, on the other hand, are bullish about the economy. As a consequence, it remains to be seen what proportion of loans under moratorium ultimately stabilise and whether this would be enough to accommodate the elevated asset quality burden. 

Asset classification and NBFC’s loans to commercial real estate ventures 

RBI had advised NBFCs to conform with Indian Accounting Standards (IndAS) and the recommendations properly authorised by their Boards and ICAI Advisories for disability identification in a memorandum issued April 17, 2020. The notice made no mention of expanding the three-month moratorium term to NBFCs. As a result, during a video call, the RBI governor explained that the regulator has no objections to banks allowing NBFCs to delay repayments until May 31. NBFCs are authorised to prolong the moratorium for another three months until August 31, 2020, according to an RBI notification dated May 23, 2020. 

Export and import aid initiatives

Exporters have faced serious difficulties as a consequence of COVID-19, such as delays/deferral of requests, delays in bill realisation, and so on. 

Relaxation of the realisation and resettlement procedures for export proceeds 

The time limit for analysing and repatriating export profits for shipments made up to and including July 31, 2020, has been extended from nine to fifteen months from the date of export, according to an RBI letter dated April 1, 2020. This measure is supposed to favour exporters by offering them more stability in negotiating potential export agreements with foreign buyers and enabling them to recognize their revenues, especially from COVID-19 affected countries, over a longer period. 

Export credits

For disbursements made before July 31, 2020, the cumulative allowable duration of pre-shipment and post-shipment credit facilities authorized by banks is extended from one year to fifteen months. This measure was declared by the RBI in a notification dated May 23, 2020, and it is envisaged to help exporters with their supply cycles. It would also aid merchants with their working capital issues and alleviate the burden of making urgent payments. 

Prolonging export bill deadlines 

For imports produced on or before July 31, 2020, the RBI has agreed to expand the period for completing external cash transfers against regular imports from six to twelve months

(i.e., except gold/diamonds and other precious jewellery/stones ) into India from the date of shipping. In a COVID-19 situation, this is supposed to provide importers with liquidity assistance, more time to handle their dues, in handling their operational cycles greater stability, enabling companies to concentrate on the crisis rather than their ledgers. 

Measures for debt management 

This initiative aims to alleviate debt sustainability restrictions on state government budgets by allowing states to loan from the CSF a greater portion of their market debts due in the current fiscal year. 

State Governments’ Integrated Sinking Fund (CSF) – Relaxing of Regulations 

The CSF is a trust fund set up by governments to help them pay down their debts. To provide more money to states, the RBI relaxed the rules regulating withdrawals from the CSF in a notification issued May 22, 2020, resulting in the release of an extra 13,300 crore to the states. 

States such as Maharashtra, Gujarat, Odisha, West Bengal that have managed to hold huge amounts in the CSF reserve would gain the most. While this initiative may help to moderate the upward trend in public borrowing costs, lower rates of interest could be detrimental to domestic saving rates, which will suffer from both income and price impacts.

 Figures 1 and 2: percentage share and debt in rupees in the banking sector. 

International measures 

The following section of the paper shall deliberate on the financial and monetary measures adopted by countries for the purpose of stabilising the banking sector amidst the tumultuous COVID-19 situation. The measures mentioned below the author deem would benefit the Indian banking sector, too if adopted and enacted. 

The United States of America 

The government of the United States of America approved the Coronavirus Assistance, Relief, and Economic Stability Act (CARES), an astoundingly broad fiscal stimulus plan designed by the Trump administration (USD 2,200 billion, about 10% of GDP or 50% of the annual National budget). Under scrutiny from the Democrats ( a majority in the house), the bill was expanded to include people with a low income and the unemployed, primarily. Via this scheme, the federal government aimed to provide American families with nearly USD 630 billion, along with subsidised loans for enterprises that may total up to USD 900 billion. Each household in America would receive a check from the Treasury for a maximum of USD 3000, based on a means-tested scheme. During the four months ending July 31, 2020, the government would raise unemployment insurance by USD 600 a week, which differs by state but ranges about USD 300 a week. The Coronavirus Assistance, Relief, and Economic Stability Act (CARES) is a USD 2.2 trillion fiscal relief package. 

Germany 

Finance Minister Olaf Scholz and Economic Minister Peter Altmaier announced an emergency policy named “A Security Umbrella for Workers and Enterprises” on March 13th. On March 23rd, the project was approved by parliament. The policy is buttressed  by four pillars: 

  1. Making the Kurzarbeitergeld (compensation for working fewer hours) more versatile. Relaxing the eligibility criteria, in particular. The expense of the measure may be in the range of EUR 10 billion.
  2. Tax-related market liquidity aid. Options for deferring tax liabilities and reducing accruals would be extended to help companies increase their liquidity. Businesses would be able to defer billions of euros in tax revenues in general. 
  3. A billion-dollar security shield for companies. Liquidity and supply chain issues can affect even the healthiest of businesses. The German government would defend companies by introducing new legislation providing unrestricted liquidity. The KfW state investment bank will support this initiative. A EUR 460 billion pledge system is introduced in the federal budget. 

About EUR 1 billion has also been allocated to the Federal Ministry of Health to tackle the coronavirus, such as for the purchase of disposable devices face masks and protective suits, assistance for the WHO in the battle against the coronavirus, and increased funding for Germany’s major public health centre, the Robert Koch Institute. Besides, EUR145 million has been allocated to the Federal Ministry of Education and Research for the development of vaccine and treatment-related interventions. 

On June 4, the Federal government unveiled a EUR130 billion stimulus package to help the economy rebound from the coronavirus epidemic (around 3.8 per cent of GDP). The initiative includes a vast number of steps totalling 57 marks. Almost half of the package is aimed at easing the crisis’s negative economic and social effects. The initiative also seeks to modernise and promote a green economy by encouraging digitalization, improving accessibility, and reducing greenhouse gas pollution. 

The federal states and jurisdictions play a vital function in reviving the economy. They have, however, been hit with a significant wage loss as a result of reduced tax collections and increased social expenditure. The coalition parties were unable to find a consensus on a debt-reduction package for certain deeply distressed localities. Instead, they chose to reimburse city governments with a significant reduction of the municipal business levy (EUR 5.9 billion). Besides, the government also agreed to assume the expenses of rental benefits for welfare claimants (EUR 4 billion) from communities and agreed to fund urban mass transportation networks (EUR 2.5 billion).

The United Kingdom

The UK Government announced a GBP 12 billion Coronavirus Emergency Plan, with GBP 5 billion set aside for the National Health Service. Both emergency funds are in addition to the GBP 18 billion in additional spending currently included in the budget, bringing the overall figure to GBP 30 billion (1.4 per cent of GDP). 

  • The Financial Conduct Authority (FCA) recommended new steps to limit the economic effects of the Covid-19 pandemic: 1) set out the FCA’s demands for firms to provide a temporary moratorium on consumer loan and credit card payments for up to three months where consumers experience financial distress as a consequence of the Covid-19 pandemic; 2) guarantee that buyers who have been financially affected by Covid-19 who still have an arranged overdraft on their current account would be reimbursed up to GBP 500. 3) encourage businesses to guarantee that all overdraft buyers should not pay more than they did when the latest overdraft reforms were affected, and 4) ensure that consumers who use both of these interim steps do not see their credit rating compromised as a result of this.
  • 16 April: The Coronavirus Business Interruption Loan Scheme (CBILS) was extended to cover major businesses. CBILS, which was introduced on March 26 and has been operating since April 6, has a fund of GBP 330 billion. Initially, CBILS only addressed businesses with fewer than GBP 45 million in annual revenue, giving them interest-free loans for up to a year with government subsidies encompassing up to 80% of the loans (up to GBP 5 m). CBILS was extended to cover Covid 19-affected businesses with a revenue of more than GBP 45 million. These businesses would be eligible to access up to GBP 50 million in government-backed bank loans if they get an “investment grade” status
  • 20 April: the government unveiled a GBP 1.25 billion aid plan for creative businesses; the scheme will continue at least until September 2020.

The government also increased its coverage to 80 per cent of the payroll salaries of firms affected by the Covid-19 pandemic until the end of June (to a maximum of GBP 2,500). The programme, which was implemented in March, was expected to last three months (starting retrospectively on 1 March) and cost GBP 40 billion. Ten million participants have shown interest in the scheme. 

  • 12 May: The government expanded its CBILS programme to cover salaries for distressed businesses by the end of October, which had previously been restricted to 80 per cent of wages up to a rate of GBP 2,500. The system has, however, been modified, with workers expected to contribute further and staff required to serve at least part-time. 

Switzerland

The Federal Council voted on March 13 to shut all markets, pubs, bars, and amusement and leisure facilities until April 19, except for grocery stores and health clinics. 

  • Checkpoints on borders with Germany, Austria, France, and Italy have been reinstated. On March 20, the Swiss Confederation announced a detailed stimulus plan worth SFr 32 billion to offset the economic effects of the coronavirus :
  • Business liquidity support: the Confederation has developed an SFr 20 billion guarantee scheme for SME loans. The businesses can apply for these loans through their primary branch. They are entitled to receive interest-free loans of up to 10% of their annual revenue, up to a maximum of SFr 20 million.
  • Bankruptcy moratorium
  • Short-term working plan: employees are not eligible to use their unused supplemental hours in their time savings account before being permitted to participate in the programme. Fixed-term contract employees, contracted contractors, apprentices, and self-employed persons will all be covered by the programme.

Furthermore, the waiting time for entry to the scheme has been removed. Administrative processes would be streamlined. 

The way ahead 

Despite the policies enforced by the RBI being only short term, they have proven to be very successful in stabilising the unpredictable situation in the banking sector. As COVID-19 spreads, all creditors and lenders should be aware of the regulatory conditions that have not been eased and take adequate steps to fulfil such responsibilities on time. 

Figure 3: Digitalization for Employees and Customers

During the recession, banks would need to consider both short-term and long-term structural plans. The majority of Indians prefer to use physical banking platforms. Though banks want their customers to use low-contact mediums, they will maintain their touchpoints even when complying with social distancing regulations. This will necessitate the rollout and introduction of advanced technologies, as well as the formulation and deployment of modern standard operating procedures (SOPs) for consumer and internal branch operations. Since revenues are under strain, banks must cut expenses to defend their profit margins. The COVID-19 crisis can be seen as an occasion for radical cost reduction. Banks must distinguish between bad and good costs. Good costs can allow for better operation and expansion, thus bad costs should be eliminated. Banks should prioritise initiatives based on their execution period and concentrate on fast wins whilst continuing to work on initiatives. The Indian banking industry began its digital transformational change a few years back. If the original goal was to compete with tech-savvy, modern-age players, the pandemic could be a watershed moment, forcing banks to embrace upcoming technologies as seen in figure 3. 

It is important to not only deal with the COVID but also to make preparations for post-crisis restoration. Banks should look to grow digitally because both urban and rural India have high smartphone penetration and access to information. The current environment has improved both sellers’ and consumers’ experience with technological use. To allow digital banking for their clients, banks may collaborate with technology companies or develop their digital capabilities. Employees, retailers, and other stakeholders would need to be empowered by similar digital campaigns. Figure 3: Customer and Employee Digital Transformation Banks’ primary cost ratios are likely to be strained in the following months, forcing banks to reconsider their fixed cost strategies. The banking industry continues to offer resources to consumers while optimising its distribution models. The present crisis differs from past crises due to a variety of reasons, including a large number of individuals employed remotely and the problems associated with working rooms, anonymity, and technical infrastructure. 

Figure 4:  the impact of COVID-19 on the banking sector          

Banks must carefully understand both their people’s immediate needs and the various near, short, and medium-term organisational, financial, dangerous, and regulatory enforcement consequences as indicated in Figure 4 and 5. They have the potential to stimulate demand and economic growth while still facilitating a swift return to stability. If banks adapt well to these unforeseen threats, they will not only benefit society but will also boost confidence and the sector’s image in the long term. Revisions of the corporate paradigm as a result of the crisis’s effects and lessons learnt, such as accelerated technology transition, institutional mobility, the future of jobs, and a greater emphasis on data protection. Impact of increased lowering of interest rates, reduced business investment if this becomes a sustained recession. The banking supervisor would be evaluated based on their behaviour in any of the three aspects of crisis management. First, react, heal, and prosper. Second, continue core activities, business progress, and customer service or Banking organisations also accept remote banking transactions. Third, maintain the motivation of employees and engagement when operating remotely, as well as legal and regulatory responsibilities, management responsibilities are met.

Regulators have worked tirelessly to mitigate the effect of the COVID-19 pandemic on all financial services firms and their clients. They have attempted to respond to firm calls for extensions and short-term revisions to standards. Based on the banking and finance strategies adopted by the several countries listed above, it can be inferred that companies and their customers are in survival mode, concentrating on coping with the effects of the pandemic while still attempting to prepare for unpredictable timescales and emerging responses. Given the same, the best advice for the Indian banking sector is to stick to the basic minimum in terms of market operations, to seek continued positive consumer results, and to log what they have achieved and how. 

In recent months, the COVID-19 pandemic has had a major effect on any sector across the world. As economies try to rebound, there is a need for innovative strategic measures and increased planning. To navigate these obstacles being posed, banks must continue to exploit technologies and incorporate resilience through their infrastructure. Banking facilities are included on the list of important services in India. Banking and financial companies were under enormous strain to keep operations running in the wake of the lockdown and health crises. The organisational and technological problems for both consumers and staff revealed a flaw and a  lack of stability of our bank services when confronted with an emergency scenario. In this article, I aimed to show a near look at the effect of pandemic covid-19 on the Indian banking system, as well as briefly address Indian banks’ readiness to adapt to covid-19 and its repercussions on the financial services market. The imminent lessons from the  COVID-19 situation would bring much-needed rigour to the bank’s backend activities. Banking operations such as cash transactions, check to clear, and other typical teller facilities had to be carried out while keeping a reasonable distance of at least a metre. Indian banks (both public and private) that are already digital with some core banking services can concentrate on a full transformation by digitising all of their functions, procedures, and systems.


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