Triple Talaq verdict: Centre won't rush to enact a new law

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.

Lucknow, Jul 19: The animal markets, which are usually bustling with activity ahead of Bakrid, are desolate this year.

The Covid-19 pandemic has shorn all festivals of public celebrations, and people are apprehensive that the tradition of animal sacrifice may be affected due to social distancing norms.

Also there is a massive drop in demand for sacrificial animals due to the financial impact of the crisis.

Chairman of All India Jamiat-ul-Quresh Sirajuddin Qureshi urged the government to come out with guidelines for carrying out the celebrations in the traditional way.

The festival will fall on July 31 or August 1. Buyers and sellers start thronging the animal markets almost two weeks ahead of the festival. But this year only a negligible number of buyers have turned up in animal markets in old Lucknow areas including Nakkhas, according to traders.

"It is very difficult to say as to what the government is thinking. 'Qurbani' is a matter of faith for the Muslims. We appeal to the government to deliberate and find a solution. This is a national problem, and our office bearers are speaking to different state governments," Qureshi said.

In the absence of guidelines, not many madrassas are buying animals for sacrifice, he said.

"The madrasas where collective 'qurbani' is done, are also not coming forward. In Bakrid, along with goats, buffaloes are also sacrificed. The government should ensure that people who are transporting the animals are not harassed by the police," Qureshi said.

Prominent Muslim cleric Khalid Rasheed Farang Mahali said he had raised the issue with the Uttar Pradesh chief minister.

"I have recently met Chief Minister Yogi Adityanath requesting him to issue guidelines for Bakrid. I am hopeful that the guidelines will be released soon," he said.

Rahat Ali, a goat trader from Rajasthan said, thousands of people will be affected due to the reduced demand for animals.

"The animal trade works in a chain involving farmers who rear animals, small traders and big traders.

"The traders buy the animals from the farmers. These are then sent to various states like Maharashtra, Gujarat and Uttar Pradesh. In the absence of demand, I did not purchase animals this year," he said.

Sajid, who supplies goats to various districts in western Uttar Pradesh, said the lockdown has affected the livelihood of people and not many have the money to buy animals for sacrifice.

"The lockdown has drained the people of their money. As a result, the animals are not getting sold," he said.

The Maharashtra government has come out with guidelines for Eid al-Adha, also known as Bakrid or Id-ul-Zuha, noting that there is a ban in place on all religious programmes and people should offer "namaz" in their homes and not in mosques.

It also said sacrificial animals should be bought online or over the phone as markets dealing with them will be closed, adding that "qurbani" should preferably be symbolic.

There will be no relaxation in restrictions for Eid in containment zones, and people are directed not to congregate in public places on the day of the festival, it added. 

Dubai, May 5: Tickets on repatriation flights from UAE to India, which start on May 7, could be costlier than regular airfare, and adding to the financial woes of those flying back. Nearly 200,000 Indians in the UAE have registered on the website seeking to return home.

“A one-way repatriation ticket to Delhi will cost approximately Dh1,400-Dh1,650 - this would earlier have cost between Dh600-Dh700 [during these months],” said Jamal Abdulnazar, CEO of Cozmo Travel. “A one-way repatriation flight ticket to Kerala would cost approximately Dh1,900-Dh2,300.”

This can be quite a burden, as a majority of those taking these flights have either lost their jobs or are sending back their families because of uncertainty on the work front. To now have to pay airfare that is nearly on par with those during peak summer months is quite a blow.

Sources said that officials in Indian diplomatic missions have already initiated calls to some expats, telling them about likely ticket fares and enquiring about their willingness to travel.

Although many believed repatriation would be government-sponsored, Indian authorities have clarified that customers would have to pay for the tickets themselves. Those who thought they were entitled to free repatriation might back out of travel plans for now.

Fact of life

But aviation and travel industry sources say higher rates cannot be escaped since social distancing norms have to be strictly enforced at all times. That would limit the number of passengers on each of these flights.

“One airline can carry only limited passengers - therefore, multiple airlines are likely to get the approval to operate repatriation flights,” said Abdulnazar. “Also, airports will have to maintain safe distance for passengers to queue up at immigration and security counters.

“Therefore, it is recommended that multiple carriers fly into multiple Indian airports for repatriation to be expedited.”

The Indian authorities, so far, have not taken the easy decision to get its private domestic airlines into the rescue act. Gulf News tried speaking to the leading players, but they declined to provide any official statements. So far, only Air India, the national airline, has been commissioned to operate the flights.

Air India finds itself in the driver's seat when it comes to operating India's repatriation flights. To date, there is no confirmation India's private airlines will be allowed to join in.

UAE carriers ready to help out

UAE’s Emirates airline, Etihad, flydubai and Air Arabia are likely to also operate repatriation flights to India after Air India implements the first phase of services.

“We are fully supporting governments and authorities across the flydubai network with their repatriation efforts, helping them to make arrangements for their citizens to return home,” said a flydubai spokesperson.

“We will announce repatriation flights as and when they are confirmed, recognising this is an evolving situation whilst the flight restrictions remain in place.”

An AirArabia spokesperson said the airline is ready to operate repatriation flights when the government tells them to.

Travel agencies likely to benefit

Apart from operating non-scheduled commercial flights, the Indian government is also deploying naval ships to bring expat Indians back. Sources claim the ships are to ferry passengers who cannot afford the repatriation airfares.

Even then, considering the sheer numbers who will want to get on the flights, travel agencies are likely to see a surge in bookings since airline websites alone may not cope with the demand set off in such a short span.

Learn from Gulf governments

In instances when they carried out their own repatriation flights, some GCC governments paid the ticket fares to fly in their citizens. Those citizens who did not have the ready funds could approach their diplomatic mission and aid would be given on a case-to-case basis.

Should Indians wait for normal services to resume?

Industry sources say that those Indians wanting to fly back and cannot afford the repatriation flights should wait for full services to resume once the COVID-19 pandemic settles.

But can those who lost their jobs or seen steep salary cuts stay on without adding to their costs? And is there any guarantee that when flight services resume, ticket rates would be lower than on the repatriation trips.

As such, normal travel is expected to pick up only after the repatriation exercise to several countries is completed. UAE-based travel agencies are not seeing any bookings for summer, which is traditionally the peak holiday season.

“Majority want to stay put unless full confidence is restored,” said Abdulnazar. “I expect full normalcy to be restored not until March 2021.

“People have also taken a hit to their income. Without disposable income, you will curtail your travel.”

What constitutes normalcy?

Airfares are expected to remain high, given the need to keep the middle seats empty to practise safe distance onboard.

“We expect holiday travel to resume by October or November - but, the travel sentiment will not go back to pre-COVID-19 levels anytime soon,” said Manvendra Roy, Vice-President – Commercial at holidayme, an online travel agency. “The need to keep the middle seat vacant will add 30-40 per cent pricing pressure per seat from an airline perspective.

“This will make holidays more expensive.”

As for business travel, it will take some time to recover. Corporate staff are now used to getting work done via conference calls. “Companies will also curtail their travel expenditure since their income has taken a hit,” said Abdulnazar.