Do you see the lockdown and the pandemic impacting retail defaults to banks? What happens to HDFC Bank, ICICI Bank and Kotak Bank?

As of now the overall impact on retail loans is not too clear but a recent report by CRISIL has surely highlighted these risks. In fact, the CRISIL reported has estimated that loans to the tune of Rs.300,000 crore may be under stress.

Now, that is a big sum and this stress refers specifically to loans given out by banks to retail borrowers and to small businesses. This is an area where a lot of private banks like HDFC Bank, ICICI Bank and Axis Bank have been extremely active.

CRISIL has pointed that loan restructuring package announced by RBI for individuals and small borrowers could make a big difference to the solvency of these borrowers. To that extent, the major defaults from such borrowers may have been averted.

However, it must be kept in mind that the restructuring is only a postponement of the problem and not a resolution. It is based on the assumption of incomes improving and if that does not happen, then private banks could be in a spot.