Covid-19 crisis may increase stress on Indian banks: Report

Titled 'Impact of COVID-19 on Consumer Business in India', the report said that through the impact on the country's economy will be on four routes a temporary supply chain disruptions, global and domestic demand may take a hit, an increased stress on banking and financial sectors and falling oil prices.

New Delhi:The coronavirus crisis is likely to increase the stress on the Indian banking system with exposure to stressed industries and higher consumer loan default, said a report by Deloitte on Wednesday.

Titled 'Impact of COVID-19 on Consumer Business in India', the report said that through the impact on the country's economy will be on four routes a temporary supply chain disruptions, global and domestic demand may take a hit, an increased stress on banking and financial sectors and falling oil prices.

It said that banking sector would face the heat due to exposure to stressed industries, rising consumer loan default because of high unemployment and household leverage.

It further said that stress on banks would impact credit growth.

On the impact on the capital and financial markets, the Deloitte report said that the stock market has fallen around 30 per cent since the pandemic started in the West.

Further, the "sharp depreciation in the rupee against the dollar worsens trade deficit as exports contribution to GDP is low".

Rising bond yields would make borrowing more expensive, thereby reducing bank margins, it said.

(IANS Report)