What has Fitch said about the COVID relief package announced by RBI?
Answer
Answer
One of the world’s leading rating agencies, Fitch Ratings, has cautioned that the RBI COVID relief package would, at best, only postpone the stress for banks and NBFCs. This was in response to the relief package announced by the RBI for the banks, NBFCs and the microfinance institutions, apart from the small finance banks.
The package included a loan restructuring scheme to help lenders overcome the mounting bad loans problem. According to Fitch, delaying recognition of bad loans is not a solution to asset quality problems. However, Fitch has also clarified that the economic shock of the COVID-2.0 would be less severe on banks compared to 2020.