Indian bank bad debt may double amid coronavirus crisis

News Network
May 4, 2020

Munbai/New Delhi, May 4: India expects bad debts at its banks could double after the coronavirus crisis brought the economy to a sudden halt, a senior government official and four top bankers said.

Indian banks are already grappling with 9.35 trillion rupees ($123 billion) of soured loans, which was equivalent to about 9.1% of their total assets at the end of September 2019.

"There is a considered view in the government that bank non-performing assets (NPAs) could double to 18-20% by the end of the fiscal year, as 20-25% of outstanding loans face a risk of default," the official with direct knowledge of the matter said.

A fresh surge in bad debt could hit credit growth and delay India's recovery from the coronavirus pandemic.

"These are unprecedented times and the way it's going we can expect banks to report double the amount of NPAs from what we've seen in earlier quarters," the finance head of a top public sector bank told Reuters.

The official and bankers declined to be named as they were not officially authorized to discuss the matter with media.

India's finance ministry declined to comment, while the Reserve Bank of India and Indian Banks' Association, the main industry body, did not immediately respond to emails seeking comment.

The Indian economy has ground to a standstill amid a 40-day nationwide lockdown to rein in the spread of coronavirus cases.

The lockdown has now been extended by a further two weeks, but the government has begun to ease some restrictions in districts that are relatively unscathed by the virus.

India has so far recorded nearly 40,000 cases of the coronavirus and more than 1,300 deaths from COVID-19, the respiratory disease caused by the coronavirus.

'RIDING THE TIGER'

Bankers fear it is unlikely that the economy will fully open up before June or July, and loans, especially those to small- and medium-sized businesses which constitute nearly 20% of overall credit, may be among the worst affected.

This is because all 10 of India's largest cities fall in high-risk red zones, where restrictions will remain stringent.

A report by Axis Bank said that these red zones, which contribute significantly to India's economy, account for roughly 83% of the overall loans made by its banks as of December.

One of the sources, an executive director of a public sector bank, said that economic growth had been sluggish and risks had been heightened, even ahead of the coronavirus crisis.

"Now we have this Black Swan event which means without any meaningful government stimulus, the economy will be in tatters for several more quarters," he said.

McKinsey & Co last month forecast India's economy could contract by around 20% in the three months through June, if the lockdown was extended to mid-May, and growth in the fiscal year was likely to fall 2% to 3%.

Bankers say the only way to stem the steep rise in bad loans is if the RBI significantly relaxes bad asset recognition rules.

Banks have asked the central bank to allow all loans to be categorized as NPAs only after 180 days, which is double the current 90-day window.

"The lockdown is like riding the tiger, once we get off it we'll be in a difficult position," a senior private sector banker said.

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Agencies
June 6,2020

United Nations, Jun 6: The coronavirus disease has not "exploded" in India, but the risk of that happening remains as the country moves towards unlocking its nationwide lockdown that was imposed in March to contain the Covid-19, according to a top WHO expert.

WHO Health Emergencies Programme Executive Director Michael Ryan on Friday said the doubling time of the coronavirus cases in India is about three weeks at this stage.

“So the direction of travel of the epidemic is not exponential but it is still growing,” he said, adding that the impact of the pandemic is different in different parts of India and varies between urban and rural settings.

“In South Asia, not just in India but in Bangladesh and...in Pakistan, other countries in South Asia, with large dense populations, the disease has not exploded. But there is always the risk of that happening,” Ryan said in Geneva.

He stressed that as the disease generates and creates a foothold in communities, it can accelerate at any time as has been seen in a number of settings.

Ryan noted that measures taken in India such as the nationwide lockdown have had an impact in slowing transmission but the risk of an increase in cases looms as the country opens up.

“The measures taken in India certainly had an impact in dampening transmission and as India, as in other large countries, open up and as people begin to move again, there's always a risk of the disease bouncing back up,” he said.

He added that there are specific issues in India regarding the large amount of migration, the dense populations in the urban environment and the fact that many workers have no choice but to go to work every day.

India went past Italy to become the sixth worst-hit nation by the COVID-19 pandemic.

India saw a record single-day jump of 9,887 coronavirus cases and 294 deaths on Saturday, pushing the nationwide infection tally to 2,36,657 and the death toll to 6,642, according to the health ministry.

The lockdown in India, was first clamped on March 25 and spanned for 21 days, while the second phase of the curbs began on April 15 and stretched for 19 days till May 3. The third phase of the lockdown was in effect for 14 days and ended on May 17. The fourth phase ended on May 31.

The country had registered 512 coronavirus infection cases till March 24.

The nation-wide lockdown in containment zones will continue till June 30 in India but extensive relaxations in a phased manner from June 8 are listed in the Union home ministry's fresh guidelines on tackling the Covid-19 pandemic issued last week.

WHO Chief Scientist Soumya Swaminathan said the over 200,000 current coronavirus cases in India, a country of over 1.3 billion people, "look big but for a country of this size, it's still modest.”

She stressed that it is important for India to keep track of the growth rate, the doubling time of the virus and to make sure that that number doesn't get worse.

She said that India is a “heterogeneous and huge country” with very densely populated cities and much lower density in some rural areas and varying health systems in different states and these offer challenges to the control of Covid-19.

Swaminathan added that as the lockdown and restrictions are lifted, it must be ensured that all precautions are taken by people.

“We've been making this point repeatedly that really if you want behaviour change at a large level, people need to understand the rationale for asking them to do certain things (such as) wearing masks,” she said.

In many urban areas in India, it's impossible to maintain physical distancing, she said adding that it then becomes very important for people to wear appropriate face coverings when they are out, in office settings, in public transport and educational institutions.

“As some states are thinking about opening, every institution, organisation, industry and sector needs to think about what are the measures that need to be put in place before you can allow a functioning and it may never be back to normal.”

She said that in many professions working from home can be encouraged but in several jobs, people have to go to work and in such cases measures must be put in place that allow people to protect themselves and others.

“I think communication and behaviour change is a very large part of this whole exercise,” she added.

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Agencies
May 19,2020

Lucknow, May 19: The administration of the Sanjay Gandhi Post Graduate Institute of Medical Sciences (SGPGI) has ordered a probe into the cardiac procedure conducted on a corona positive patient in the hospital.

The patient underwent a cardiac procedure without being tested for corona before the surgery. He later tested positive for COVID-19, leading to panic among the staff and other patients.

The medical staff that came in contact with the patient were quarantined on Monday while the area was sanitized.

As per orders from the State Medical Education Department, even in emergency cases, patients are to be screened for Covid-19 before procedures are done.

According to the SGPGI administration, the incident took place late on Sunday night.

In an official statement, director, Prof R.K. Dhiman said, "The 63-year-old patient was a case of complete cardiac blockage and needed an urgent temporary pacemaker. The patient was admitted to the holding area of the institute and later shifted to the MICU for permanent pace making."

He said that when the patient's corona status was found to be positive on the Hospital Information System, she was shifted to the Rajdhani COVID Hospital.

The Director said, "Though the involved areas have been sanitized and healthcare workers were quarantined as per protocol, a probe has been ordered to investigate the lapses."

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News Network
February 26,2020

Feb 26: Looking out over the world’s largest cricket stadium, the seats jammed with more than 100,000 people, India’s prime minister heaped praise on his American visitor.

“The leadership of President Trump has served humanity,” Prime Minister Narendra Modi said Monday, highlighting Trump’s fight against terrorism and calling his 36-hour visit to India a watershed in India-U.S. relations.

The crowds cheered. Trump beamed.

“The ties between India and the U.S. are no longer just any other partnership,” Modi said. “It is a far greater and closer relationship.”

India, it seems, loves Donald Trump. It seemed obvious from the thousands who turned out to wave as his motorcade snaked through the city of Ahmedabad, and from the tens of thousands who filled the city’s new stadium. It seemed obvious from the hug that Modi gave Trump after he descended from Air Force One, and from the hundreds of billboards proclaiming Trump’s visit.

But it’s not so simple.

Because while Trump is genuinely popular in India, his clamorous and carefully choreographed welcome was also about Asian geopolitics, China’s growing power and a masterful Indian politician who gave his American visitor exactly what he wanted.

Modi “is doing this not necessarily because he loves Trump,” said Tanvi Madan, the director of the India Project at the Brookings Institution in Washington, D.C. “It’s very much about Trump as the leader of the U.S. and recognizing what it is that Trump himself likes.”

Trump likes crowds — big crowds — and the foot soldiers of India’s political parties have long known how to corral enough people to make any politician look popular. In a city like Ahmedabad, the capital of Modi’s home state of Gujarat and the center of his power base, it wouldn’t take much effort to fill a cavernous sports stadium. It was more surprising that a handful of seats remained empty, and that some in the stands had left even before Trump had finished his speech.

For India, good relations with the U.S. are deeply important: They signal that India is a serious global player, an issue that has long been important to New Delhi, and help cement an alliance that both nations see as a counterweight to China’s rise.

“For both countries, their biggest rival is China,” said John Echeverri-Gent, a professor at the University of Virginia whose research often focuses on India. “China is rapidly expanding its presence in the Indian Ocean, which India has long considered its backyard and its exclusive realm for security concerns.”

“It’s very clearly a major concern for both India and the United States,” he said.

Trump isn’t the first U.S. president that Modi has courted. In 2015, then-President Barack Obama was the first American chief guest at India’s Republic Day parade, a powerful symbolic gesture. Obama also got a Modi hug, and the media in both countries were soon writing about the two leaders’ “bromance.”

Trump is popular in India, even if some of that is simply because he’s the U.S. president. A 2019 Pew Research Center poll showed that 56% of Indians had confidence in Trump’s abilities in world affairs, one of only a handful of countries where he has that level of approval. But Obama was also popular: Before he left office, he had 58% approval in world affairs among Indians.

The Pew poll also indicated that Trump’s support was higher among supporters of Modi’s Hindu nationalist party.

That’s not surprising. Both men have fired up their nationalist bases with anti-Muslim rhetoric and government policies, from Trump’s travel bans to Modi’s crackdown in Kashmir, India’s only Muslim-majority state.

And Trump’s Indian support is far from universal. Protests against his trip roiled cities from New Delhi to Hyderabad to the far northeastern city of Gauhati, although those demonstrations were mostly overshadowed by protests over a new Indian citizenship law that Modi backs.

Modi, who is widely popular in India, has faced weeks of protests over the law, which provides fast track naturalization for some foreign-born religious minorities — but not Muslims. While Trump talked about ties with India on Tuesday, Hindus and Muslims fought in violent clashes that left at least 10 people dead over two days.

In some ways, Modi and Trump are powerful echoes of each other.

They have overlapping political styles. Both are populists who see themselves as brash, rule-breaking outsiders who disdain their countries’ traditional elites. Both are seen by their critics as having authoritarian leanings. Both surround themselves with officials who rarely question their decisions.

But are they friends?

Trump says yes. “Really, we feel very strongly about each other,” he said at a New Delhi press briefing.

But many observers aren’t so sure.

“The question is how much of this is real chemistry, as opposed to what I’d call planned chemistry” orchestrated for diplomatic reasons, said Madan. “It’s so hard to know if you’re not in the room.”

Certainly, Modi understands America’s importance to India. While the two countries continue to bicker about trade issues, the prime minister organized a welcome that impressed even India’s news media, which have watched countless choreographed mass political rallies.

“There is no other country for whose leader India would hold such an event, and for which an Indian prime minister would lavish such rhetoric,” the Hindustan Times said in an editorial.

“The spectacle and the sound were worth a thousand agreements.”

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