(IMPACT OF COVID-19 ON INDIAN

BANKING SECTOR)
A project Submitted to
University of Mumbai for partial fulfillment of the degree of
Master in Commerce – Semester III
Under the Faculty of Commerce (Banking & Finance)
(Advanced Accountancy) (Business Management)
By
ISHA ANIL MAGHAM
Roll No: 21
Under the Guidance of (Name of Mentor/Internal Examiner)

SIR SITARAM & LADY SHANTBAI PATKAR COLLEGE OF ARTS & SCIENCE
AND
V.P. VARDE COLLEGE OF COMMERCE & ECONOMICS (Autonomous)
S.V. ROAD, GOREGAON (WEST), MUMBAI-400104

I|Page
 2021-22

(IMPACT OF COVID-19 ON INDIAN

BANKING SECTOR)
A project Submitted to
University of Mumbai for partial fulfillment of the degree of
Master in Commerce – Semester III
Under the Faculty of Commerce (Banking & Finance)
(Advanced Accountancy) (Business Management)
By
ISHA ANIL MAGHAM
Roll No: 21
Under the Guidance of (Name of Mentor/Internal Examiner)

SIR SITARAM & LADY SHANTBAI PATKAR COLLEGE OF ARTS & SCIENCE
AND
V.P. VARDE COLLEGE OF COMMERCE & ECONOMICS (Autonomous)
S.V. ROAD, GOREGAON (WEST), MUMBAI-400104
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(Inside Page)

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 SIR SITARAM & LADY SHANTBAI PATKAR COLLEGE OF ARTS & SCIENCE
AND
V.P. VARDE COLLEGE OF COMMERCE & ECONOMICS (Autonomous)
S.V. ROAD, GOREGAON (WEST), MUMBAI-400104

CERTIFICATE
This is to certify that Kumari (ISHA ANIL MAGHAM) has worked and duly
completed his/her Project work for the degree of Master in Commerce under the Faculty of
Commerce in the subject of Banking & Finance/Advanced Accountancy /Business
Management and his /her project is entitled, “IMPACT OF COVID-19 ON INDIAN
BANKING SECTOR” under my supervision.
I further certify that the entire work has been done by the learner under my guidance and that no
part of it has been submitted previously for any Degree or Diploma of any University.
It is his/her own work and facts reported by his/her personal findings and investigations.

________________________ __ ___________________
(Mentor/Internal Examiner) (Dr. Shital Patil)
Coordinator
________________________ _____________________
(External Examiner) (Dr. Shrikant Sawant)

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 Principal
Date of submission:
(page 2)

DECLARATION BY LEARNER

I, Kumari (ISHA ANIL MAGHAM), here by, declare that the work embodied in this project
work titled “IMPACT OF COVID-19 ON INDIAN BANKING SECTOR” forms my own
contribution to the research work carried out under the guidance of (Name of internal Guide) is
a result of my own research work and has not been previously submitted to any other University
for any other Degree/Diploma to this or any other University.

Where ever reference has been made to previous works of others, it has been clearly indicated
as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and presented
in accordance with academic rules and ethical conduct.

_____________________
(Name and Signature of learner)
Roll No.:

______________________________
(Mentor/Internal Examiner)

(page 3)

X|Page
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions in the completion
of this project.

I take this opportunity to thank the University of Mumbai for giving me a chance to do this project.

I would like to thank my Principal, Dr. Srikant Sawant, for providing the necessary facilities required for
completion of this project.

I take this opportunity to thank our Coordiantor, Dr. Shital N. Patil, for his moral support and guidance.

I would also like to express my sincere gratitude towards my project guide, (Name of Mentor/Internal
Examiner) whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books and magazines related
to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in the completion of
the project, especially my parents and Peers who supported me throughout my project.

_________________
(Name & Signature of the learner)
Roll No. ________

(page 4)

Index

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Sr. no. Chapter Scheme Page No.
1 Title Page (Inside) II
2 Certificate III
3 Declaration by Learner IV
4 Acknowledgement V
5 Index of contents & Tables VI
6 Abstract/Summary
7 Chapter 1: Introduction
1.1. Introduction
1.2.Problem on hand
1.3. Historical background
1.4. Profile of the study area
1.5.Conceptual framework
8 Chapter 2: Review of literatures

9 Chapter 3:.Research Methodology

3.1.Objectives of the study
3.2 Hypothesis
3.3 Scope of the study
3.4 Limitations of the study
3.5 Significance of the study
3.6 Selection of the problem,
3.7 Sample Size
3.8 Collection of Data
3.9 Tabulation of Data
3.10 Techniques used for data collection and
analysis

10 Chapter 4: Data Analysis, Interpretation and

Presentation
4.1.Analysis of data with tabular and graphical
presentation
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 4.2 Interpretation of data
11 Chapter 5: Conclusions and Suggestions
4.1.Summary & Conclusion
4.2.Recommendations
4.3.Future Scope
4.4.Limitations
12 Bibliography

List of tables, if any, with page numbers

List of graphs, if any, with page numbers
List of appendix, if any, with page numbers
Abbreviations used, if any, should be given at bottom of relevant page.

NOTE:1) Font type: Times New Roman, Font size: 12 for content and 14 for title,
2) Line space: 1.5 for content
3) Paper size: A4, Margin: in left – 1.5, Up-down & right- 1.
4) The project report should be of about 50 to 80 pages
5) Two hard bound copies (Black Books) should be submitted.
6) Your data shall be primary & secondary in nature
7) Field visit may be conducted which will strengthen the project

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 ABSTRACT

The purpose of this paper is to contribute to the academic research in the management
field, by exploring banking strategies implemented during complex crises, with a focus on the
recent pandemic. To improve the comprehension of the economic consequences of the COVID-
19 pandemic we analyzed the differences between the crisis from 2019-2021 and the crisis
induced by the pandemic. The banking system has always been at the center of the crises, both
in 2008 and in the 1930s, but this time the situation is different because now, we are facing a
crisis that is related to systemic health issues. In the previous crises, banks were considered as
part of the problem, but this time they are perceived as part of the solution. This approach
increases the role of banks in the coronavirus crisis and the strategies adopted by banks
influence the whole economy. The pandemic has changed the world economy entirely and
impacted tremendously most businesses. The banking system plays an essential role in this
situation because it is a key component from an economic point of view. In recent years, the
banking system has adapted continuously – it has been reinvented to keep up with customer
expectations and the need for cost reductions. The COVID-19 pandemic has accelerated
digitalization in the banking system although, the need for innovation and digital strategies have
been an important factor in banking even before the pandemic had started. We present
furthermore an opinion based on a narrative literature review and a summary of the most
important elements that redesign the banking system during the COVID-19 pandemic context.
The literature regarding the COVID-19 pandemic and its implications for the banking system is
still developing since the pandemic is an unfolding new experience for the world.

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 Chapter 1 : Introduction

INDIAN BANKING SECTOR

The Banking system of a country is an important pillar holding up the financial system of the country’s
economy. The major role of banks in a financial system is the mobilization of deposits and disbursement of
credit to various sectors of the economy. The existing, elaborate banking structure of India has evolved over
several decades. The Indian banking industry has its foundations in the 18th century, and has had a varied
evolutionary experience since then. The initial banks in India were primarily traders’ banks engaged only in
financing activities. Banking industry in the pre-independence era developed with the Presidency Banks, which
were transformed into the Imperial Bank of India and subsequently into the State Bank of India. The initial days
of the industry saw a majority private ownership and a highly volatile work environment. Major strides towards
public ownership and accountability were made with Nationalization in 1969 and 1980 which transformed
the face of banking in India. The industry in recent times has recognized the importance of private and foreign
players in a competitive scenario and has moved towards greater liberalization.

• Structure of the Indian Banking System

• Scheduled, Non-Scheduled Banks and Development Banks
• Commercial Banks
• Cooperative Banks
• Development Banks

Structure of the Indian Banking System

Reserve Bank of India is the Central Bank of our country. It was established on 1st April 1935 under
the RBI Act of 1934. It holds the apex position in the banking structure. RBI performs various developmental
and promotional functions. As of now 26 public sector banks in India out of which 21 are Nationalized banks
and 5 are State Bank of India and its associate banks. There are total 92 commercial banks in India. Public
sector banks hold near about 75% of the total bank deposits in India. The structure of the banking system of
India can be broadly divided into scheduled banks, non-scheduled banks and development banks. Banks that are
included in the second schedule of the Reserve Bank of India Act, 1934 are considered to be scheduled banks. 

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 All scheduled banks enjoy the following facilities:
 Such a bank becomes eligible for debts/loans on bank rate from the RBI
 Such a bank automatically acquires the membership of a clearing house.

All banks which are not included in the second section of the Reserve Bank of India Act, 1934 are Non-
scheduled Banks. They are not eligible to borrow from the RBI for normal banking purposes except for
emergencies. Scheduled banks are further divided into commercial and cooperative banks. Bank is an institution
that has the primary function of depositing and lending money to needy individuals , businesses and
governments. Banks around the world are considered trustworthy.

When a person deposits money in a Bank, it does not mean to the Banks what the amount is. The person
knows that the money is safe with the bank. The Bank provides many facilities to customers such as providing
loans, debit cards and credit cards measures to generate demand and ease the liquidity by ensuring public sector
banks lend further to NBFCs, introducing partial credit guarantee scheme, organizing loan mela etc. prominent
position in India’s economy and contribute to employment in India. Unfortunately of Banks has deteriorated.

The condition of Public Sector Banks has deteriorated. facilities. Indian Banking industry which is
almost 200years old. Since the beginning of the reforms in 1991, it has been expanded and modernized.( KPMG
2017 ) as certain that the Banking sector is poised to become the fifth largest banking industry in the world in
the year 2020 and will be the third largest by 2025. There are currently 34 Banks in India, out of which 12 are
Public sector Banks. 14 Banks were nationalized in 1969 and 6 Banks were nationalized in 1980. The Reserve
Bank of India announced in August 2019 that banks can have an exposure of up to 20 per cent of their Tier 1
capital to a single NBFC.
This limit was 15 per cent earlier. This helped boost credit flow as bank funding to NBFCs grew by 30
per cent year on year. The Government has taken a series of measures to generate demand and ease the liquidity
by ensuring public sector banks lend further to NBFCs, introducing partial credit guarantee scheme, organizing
loan mela etc. Modern banking in India originated in the last decade of the 18th century. Among the
first banks were the Bank of Hindustan, which was established in 1770 and liquidated in 1829–32; and
the General Bank of India, established in 1786 but failed in 1791.

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 The largest and the oldest bank which is still in existence is the State Bank of India (SBI). It originated
and started working as the Bank of Calcutta in mid-June 1806. In 1809, it was renamed as the Bank of Bengal.
This was one of the three banks founded by a presidency government, the other two were the Bank of
Bombay in 1840 and the Bank of Madras in 1843. The three banks were merged in 1921 to form the Imperial
Bank of India, which upon India's independence, became the State Bank of India in 1955. For many years, the
presidency banks had acted as quasi-central banks, as did their successors, until the Reserve Bank of India was
established in 1935, under the Reserve Bank of India Act, 1934.

In 1960, the State Banks of India was given control of eight state-associated banks under the State Bank
of India (Subsidiary Banks) Act, 1959. These are now called its associate banks. In 1969, the Government of
India nationalized 14 major private banks; one of the big banks was Bank of India. In 1980, 6 more private
banks were nationalized. These nationalised banks are the majority of lenders in the Indian economy. They
dominate the banking sector because of their large size and widespread networks.

The Indian banking sector is broadly classified into scheduled and non-scheduled banks. The scheduled
banks are those included under the 2nd Schedule of the Reserve Bank of India Act, 1934. The scheduled banks
are further classified into: nationalised banks; State Bank of India and its associates; Regional Rural
Banks (RRBs); foreign banks; and other Indian private sector banks. The SBI has merged its Associate banks
into itself to create the largest Bank in India on 1 April 2017. With this merger SBI has a global ranking of 236
on Fortune 500 index. The term commercial banks refers to both scheduled and non-scheduled commercial
banks regulated under the Banking Regulation Act, 1949.

Generally the supply, product range and reach of banking in India is fairly mature-even though reach in
rural India and to the poor still remains a challenge. The government has developed initiatives to address this
through the State Bank of India expanding its branch network and through the National Bank for Agriculture
and Rural Development (NABARD) with facilities like microfinance. The Banking system of a country is an
important pillar holding up the financial system of the country’s economy. The major role of banks in a
financial system is the mobilization of deposits and disbursement of credit to various sectors of the economy.
The existing, elaborate banking structure of India has evolved over several decades.

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 The Indian banking system consists of 12 public sector banks, 22 private sector banks, 46 foreign banks,
56 regional rural banks, 1485 urban cooperative banks and 96,000 rural cooperative banks in addition to
cooperative credit institutions As of November 2020, the total number of ATMs in India increased to 209,282.

Scheduled banks are further divided into commercial and cooperative banks.

Scheduled, Non-Scheduled Banks and Development Banks

Commercial Banks

The institutions that accept deposits from the general public and advance loans with the purpose of
earning profits are known as Commercial Banks.
Commercial banks can be broadly divided into public sector, private sector, foreign banks and RRBs.

 In Public Sector Banks the majority stake is held by the government. After the recent amalgamation of
smaller banks with larger banks, there are 12 public sector banks in India as of now. An example of
Public Sector Bank is State Bank of India. The Central Government entered the banking business with
the nationalization of the Imperial Bank of India in 1955. A 60% stake was taken by the Reserve Bank

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 of India and the new bank was named State Bank of India. The seven other state banks became
subsidiaries

of the new bank in 1959 when the State Bank of India (Subsidiary Banks) Act, 1959 was passed by
the Union government. The next major government intervention in banking took place on 19 July 1969
when the Indira government nationalized an additional 14 major banks. The total deposits in the banks
nationalized in 1969 amounted to 50 crores. This move increased the presence of nationalized banks in
India, with 84% of the total branches coming under government control. Currently there are 21
Nationalized banks in India. The public sector accounts for 75 percent of total banking business in India
and State Bank of India is the largest commercial bank in terms of volume of all commercial banks.

Now from April 1, 2017 all the 5 associate banks of SBI and Bhartiya Mahila Bank are merged with
State Bank of India. After this merger now SBI is counted among the top 50 largest banks of the world.

Nationalized Banks in India are

1. Allahabad Bank
2. Andhra Bank
3. Bank of India
4. Bank of Baroda
5. Bank of Maharashtra
6. Canara Bank
7. Central Bank of India
8. Corporation Bank
9. Dena Bank
10. Indian Bank
11. Indian Overseas Bank
12. Oriental Bank of Commerce

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 13. Punjab & Sindh Bank
14. Punjab National Bank

15. State Bank of India

16. Syndicate Bank
17. UCO Bank
18. Union Bank of India
19. United Bank of India
20. Vijaya Bank

 Private Sector Banks are banks where the major stakes in the equity are owned by private
stakeholders or business houses. A few major private sector banks in India are HDFC Bank, Kotak
Mahindra Bank, ICICI Bank etc. The private-sector banks in India represent part of the Indian
banking sector that is made up of both private and public sector banks. The "private-sector
banks" are banks where greater parts of stake or equity are held by the private shareholders and not
by government.

 List of Private Sector Banks is:

Banks Established
1. Axis Bank (earlier UTI Bank) 1993(as
UTI Bank)
2. Bank of Punjab (actually an old generation
private bank since it was not founded under
post-1993 new bank licensing regime)
3. Centurion Bank Ltd. (Merged in Bank of
Punjab in late 2005 to become Centurion Bank
1994
of Punjab, acquired by HDFC Bank Ltd. in
2008)
4. Development Credit Bank (Converted from
1995
Co-operative Bank, now DCB Bank Ltd.)
5. ICICI Bank (previously ICICI and then both
merged total merger SCICI+ICICI+ICICI Bank 1996
Ltd)

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 6. IndusInd Bank 1994
7. Kotak Mahindra Bank 2003
8. Yes Bank 2005
9. Balaji Corporation Bank Limited 2010
10. HDFC bank 1994
11. Bandhan bank 2015
12. IDFC Bank 2015

 A Foreign Bank is a bank that has its headquarters outside the country but runs its offices as a private
entity at any other location outside the country. Such banks are under an obligation to operate under the
regulations provided by the central bank of the country as well as the rule prescribed by the parent
organization located outside India. An example of Foreign Bank in India is Citi Bank. A foreign bank
with the obligation of following the regulations of both its home and its host countries. Loan limits for
these banks are based on the capital of the parent bank, thus allowing foreign banks to provide more
loans than other subsidiary banks. Foreign banks are those banks, which have their head offices abroad.
CITI bank, HSBC, Standard Chartered etc. are the examples of foreign bank in India. Currently India
has 36 foreign banks.
 Regional Rural Banks were established under the Regional Rural Banks Ordinance, 1975 with the aim
of ensuring sufficient institutional credit for agriculture and other rural sectors. The area of operation of
RRBs is limited to the area notified by the Government. RRBs are owned jointly by the Government of
India, the State Government and Sponsor Banks. An example of RRB in India is Arunachal Pradesh
Rural Bank. The government of India set up Regional Rural Banks (RRBs) on October 2, 1975. The
banks provide credit to the weaker sections of the rural areas, particularly the small and marginal
farmers, agricultural labourers, and small entrepreneurs. There are 82 RRBs in the country. NABARD
holds the apex position in the agricultural and rural development. List of some RRBs is given below:

Cooperative Banks
A Cooperative Bank is a financial entity that belongs to its members, who are also the owners as well
as the customers of their bank. They provide their members with numerous banking and financial services.
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Cooperative banks are the primary supporters of agricultural activities, some small-scale industries and self-
employed workers. An example of a Cooperative Bank in India is Mehsana Urban Co-operative Bank.

At the ground level, individuals come together to form a Credit Co-operative Society. The individuals in
the society include an association of borrowers and non-borrowers residing in a particular locality and taking
interest in the business affairs of one another. As membership is practically open to all inhabitants of a locality,
people of different status are brought together into the common organization. All the societies in an area come
together to form a Central Co-operative Banks. Co-operative bank was set up by passing a co-operative act in
1904. They are organized and managed on the principal of co-operation and mutual help. The main objective of
co-operative bank is to provide rural credit. The cooperative banks in India play an important role even today in
rural co-operative financing. The enactment of Co-operative Credit Societies Act, 1904, however, gave the real
impetus to the movement. The Cooperative Credit Societies Act, 1904 was amended in 1912, with a view to
broad basing it to enable organization of non-credit societies.

Cooperative banks are further divided into two categories - urban and rural.
Regional Rural Banks (RRBs) are government owned scheduled commercial banks of India that operate at regional
level in different states of India. These banks are under the ownership of Ministry of Finance , Government of India. They were
created to serve rural areas with basic banking and financial services. However, RRBs also have urban branches. The area of
operation is limited to the area notified by the government of India covering, and it covers one or more districts in the State.
RRBs perform various functions such as providing banking facilities to rural and semi-urban areas, carrying out government
operations like disbursement of wages of MGNREGA workers and distribution of pensions, providing para-banking facilities
like locker facilities, debit and credit cards, mobile banking, internet banking, and UPI services.

 Rural Banks are either short-term or long-term.

o Short-term cooperative banks can be subdivided into State Co-operative Banks, District Central
Co-operative Banks, Primary Agricultural Credit Societies.
o Long-term banks are either State Cooperative Agriculture and Rural Development Banks
(SCARDBs) or Primary Cooperative Agriculture and Rural Development Banks (PCARDBs).
 Urban Co-operative Banks (UCBs) refer to primary cooperative banks located in urban and semi-urban
areas. The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary
cooperative banks located in urban and semi-urban areas. ... These banks were traditionally centred

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 around communities, localities work place groups. They essentially lent to small borrowers and
businesses.

Development Banks

Financial institutions that provide long-term credit in order to support capital-intensive investments
spread over a long period and yielding low rates of return with considerable social benefits are known
as Development Banks. The major development banks in India are; Industrial Finance Corporation of India
(IFCI Ltd), 1948, Industrial Development Bank of India' (IDBI) 1964, Export-Import Banks of India (EXIM)
1982, Small Industries Development Bank Of India (SIDBI) 1989, National Bank for Agriculture and Rural
Development (NABARD) 1982.

The banking system of a country has the capability to heavily influence the development of a country’s
economy. It is also instrumental in the development of rural and suburban regions of a country as it provides
capital for small businesses and helps them to grow their business. The organized financial system comprises
Commercial Banks, Regional Rural Banks (RRBs), Urban Co-operative Banks (UCBs), Primary Agricultural
Credit Societies (PACS) etc. caters to the financial service requirement of the people. The initiatives taken by
the Reserve Bank and the Government of India in order to promote financial inclusion have considerably
improved the access to the formal financial institutions. Thus, the banking system of a country is very
significant not only for economic growth but also for promoting economic equality.

Characteristics of Banking Sectors:

Banking System of a country contributes a great deal in the process of its economic development. It therefore
becomes essential that a country has a good banking system. Following are the characteristic features of a good
banking system. Banks play an essential role in industrial work and trade. In a country, the development of a
country is measured based on how well the banking sector of the country works.

In the old times, there was no concept of banks and people used to lend money to people who needed it on
various interest rates.

Initially, that people worked well as people were less greedy but because of the increase in problem in the
simple lending and borrowing system, it became necessary to introduce the formalized system as a result of
which banking system were introduced.

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The word “bank” is derived from the French word “Banque” or the Italian word “Banca” whose meaning is
money exchange table or bench. This term was first used by the European lender who used to display money on
the table to lend money to the people.

This was the brief history behind the term bank. A new bank can be defined as the financial institution which
deals with the money related transactions such as loans, deposits, saving, etc. and other finance-related services.

In this article, you will learn about the different features of a bank in detail to establish a better understanding of
the banking system.

1. Conducive to Country’s Economic Conditions:

Banking system of a country should be conducive to its economic conditions. Indian economy is an
underdeveloped agricultural economy. It needs a banking system that identifies various sources of credit and
generates suitable credit facilities for agricultural and related sectors of the economy.

2. Sound Financial Basis:

A good banking system should have sound financial basis. It should generate public faith for which it
should be mandatory for the banks to obtain license from the Govt. Banks should have enough of minimum
reserves to retain their credibility. Also, credit- related risks should be minimized.

3. Mobilisation of Savings:
A good banking system should facilitate mobilization of savings. People should be encouraged to save
more and assured of suitable investment prospects.

4. Controlled Credit:
A good banking system underlines the importance of controlled credit. Flow of credit is so channelized
that it conforms to the development needs of the nation. Central bank of the country should have quantitative as
well as qualitative control over the flow of credit.

5. Uniformity of Policies:
A good banking system should exhibit uniformity of policies. If dear- money policy is needed during
periods of inflation, it must be uniformly adopted across all sectors of the economy. In case of finance-crunch,

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the whole banking system of the nation should adhere to the required monetary discipline. There should be no
loopholes in the system. Monetary System should be conducive to growth programmes of the nation.

6. A Co-ordinated System:
A good banking system should be a well co-ordinated system of banking. There can be diverse
categories of banking institutions in the country, but all should be complementary to each other in conformity
with the overall programmes of growth and development. There should only be a healthy competition across
different banking institutions that only promote the efficiency and productivity of the Banking System as a
whole. Thus, a fairly high degree of complementarily is expected across industrial banks, rural development
banks, Mutual Fund, Financial Institutions and other financial intermediaries. The whole structure of financial
intermediaries should efficiently cater to diverse financial needs of various sectors of the economy.

7. Trained and Progressive Administration:

Trained and progressive administration is yet another characteristic of a good banking system.
Administrative set of the banking structure must conform to the standard norms of efficiency and productivity.
And these norms of efficiency should not only yield high profitability but also ensure efficient consumer
service. Central Bank of the country and the Government should have fair degree of control over the banking
system with a view to ensuring progressive banking administration.

8. Modernization:
A good banking system should be exposed to modernisation with a view to stimulating dynamism in its
functioning. It must be integrated with the banking system of developed nations as a part of overall
globalization of diverse economic structures in different countries of the world.In short, a good banking system
should be friendly to overall programmes of growth and development of a nation and should be modern as well
as flexible to function as an integrated unit of the global financial market structure.

Features Of Banking System

1 Deals with money

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 The Main Features of a bank is that it deals with all the money-related transactions. For example, you
can deposit your money in a bank account to save it securely, and you will also get interested in the money that
you will save in the account. Therefore, it is the easiest way to increase your money without putting it at any
risk. Moreover, if you need the money, then you can borrow it from the bank at a certain interest. For example,
you can borrow money from the bank to pay your tuition fees as well as you can also borrow money from the
bank you want to buy a car. However, you are supposed to pay the money back to the bank with interest.

2 Provide loans

Banks make extra money by providing loans for different products to the loan. The bank makes the extra
money by lending money to the eligible person at certain rates. Nowadays, banks provide loans for various
requirements such as study loan, car loan, home loan, personal loans, etc. Different banks provide different
loans at different interest rates. You can compare the interest rates of different banks to get a loan at minimum
interest rates.

3 Identity

As I told you, there are various banks which provide loans at different interest rates. Therefore, each
bank has a different name which helps the people to identify it easily and to differentiate with other banks. Even
though the basic services provided by all banks are the same, but each bank tries to provide different interest
rates and better services to attract more and more customers. Therefore, each bank uses a unique bank name and
unique tag line to sell their services.

4 Withdrawal and payment facilities

A Bank provides various payment and withdrawal services to customers so that they can receive their
money hassle-free. Customers can withdraw money using cheques and drafts and also from the ATMs installed
by the banks at different locations in the city. They can withdraw money using the debit cards provided by the
bank the card is directly linked with the bank and customers can withdraw money anywhere in the world
without going to the bank and even without carrying their passbook.

5 Internet services

Another feature of a Bank is that modern banks are also providing internet services. The development of
the internet and its inclusion in the banking sector has made it even more easy for people to carry out various

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transactions. Banks are providing online services through their apps. You can pay bills, buy food, go shopping
without having cash with you. With the help of banking apps, you can pay for everything online. Nowadays,
more and more banks are taking their business online. It helps in making safe and risks free transactions, and
there are fewer chances of stealing taxes. There are specific terms for these types of transactions, such as
internet banking and mobile banking.

6 Business

The only work of banking is not to provide banking services to customers. All banks are involved in the
subsidiary businesses to make more money. Their sole responsibility to provide maximum satisfaction to their
customers and to provide them maximum interest rates so that more customers do banking with them. The
money is passed from one hand to another to make a profit.

7 Increasing functionality

Like other industries banking sector is also focused on enhancing their functionality. Banks have
developed from just providing money lending and cash deposit and withdrawal services to providing loans and
credit to cashless bank services to internet and mobile banking. It is one of the fields which are growing fastest.
It will not be wrong to assume that banks will be providing more services in the future in addition to internet
banking and mobile banking and people’s dependency on the cash will reduce to almost zero percent.

8 Branches at different locations

Also, the features of a bank include services to its customers wherever they live in the whole world.
Most banks are opening their branches the rural part of the country to connect people with the banks and to gain
more profit. People are not required to travel miles like the old times to do banking. They can visit the nearest
branch to them. Each bank is opening more and more branches with the increase in the population so that they
can satisfy their customers properly by being near to them.

9 Bank can be a company or an individual providing banking services

XXVII | P a g e
 Usually, when you hear about the word bank, you think about a large place where many people are
working and dealing with the money transactions. But it is not wrong to say that a bank can be large
organization consist of hundreds of people or it can be a unit managed by a single person.

10 Commercialized

All the banking services are taking place with a single AIM to make money. You might feel perplexed
how bank money by managing others money. But this is the key. We hand over our money for a small interest
on the money deposited by us. The bank uses our money to lend it to others or by investing it in profitable
businesses to make profits. If you think your money is sitting in a banks locker, then you are wrong. You might
have digits of the money mentioned in your passbook, but you might be rotating between one person to another
to make more money to the investor.

XXVIII | P a g e
 COVID-19: Impact on Banking Sector

The havoc created by the world-wide pandemic COVID-19 toppled the complete economic status of the
country, under brunt. The economy has been extremely affected due to COVID-19 Pandemic. Reserve Bank of
India; the Apex bank of India made necessary changes with the help of expert in their policy for facing
COVID19 pandemic. Entire Indian Banking sector faced and continue to face many challenges such as
liquidity issue, Reserve Bank Of Indian reduced REPO rate to name a few. Since people are struggling to
receive income, Reserve Bank of India decided to provide concession for paying EMI from customer by
increasing the period for re-payment. The objective of the research paper is to study the changes RBI bought in

XXIX | P a g e
its policy due to COVID-19 and also in general how COVID-19 has impacted the Indian Banking Sector.
Further the solution is proposed for Indian Banking system to tackle the losses due to COVID19 Pandemic.

The research found that Indian Banking system has added various measures due to COVID-19 Pandemic
to make Banking system smooth and effective. Most of the Indian Banks were facing the problem of NPA, Non
recovery of loan, customer frauds, Bad Loans etc. and to add on to it COVID-19 has expedited the collapse of
Indian Banking business. No doubt banks are established in India with a fundamental purpose to make profit by
giving expected comfort to customers. But Covid19 has changed the scenario of Indian customers. Due to shut
down of businesses income source of the people came to halt. Then where lie the scope of availing loan and
repaying with interest. These challenges our Indian banks are facing in current pandemic situation.

In today’s era, as everyone knows that to defeat a pandemic like covid-19, the Indian government
announced complete lockout in the country from 24 march 2020 and was then extended to 3 may 2020 by the
Indian government. The Indian government needs to lockout so that the lives of the people of the country can
be saved. This is going to severely affect various sectors of our country. Banking is the backbone of the Indian
economy. This article is an attempt to assess the causal impact of a pandemic like covid-19 on banks due to
lockdown.

As a result all commercial organizations, educational institutions and public and private sector offices
have been closed. The article has indicated a very serious impact of the lockdown on banks in the event of
moving beyond July 2020. The economic impact of the COVID-19 pandemic in India has been largely
disruptive. India's growth in the fourth quarter of the fiscal year 2020 went down to 3.1% according to
the Ministry of Statistics. The Chief Economic Adviser to the Government of India said that this drop is mainly
due to the coronavirus pandemic effect on the Indian economy. Notably India had also been witnessing a pre-
pandemic slowdown, and according to the World Bank, the current pandemic has "magnified pre-existing risks
to India's economic outlook".

The first news of the outbreak of novel corona virus came from Wuhan city of China on 31 December
2019. This corona virus is a new virus that has not yet been identified in humans. The literature indicates that
the corona virus is a very large family of viruses. Its spreading speed is very fast this corona virus can cause
anything from the common cold to the more severe autism syndrome. To prevent this from spreading across the
country, the Indian government announced a lockout on 24 march 2020. extended to 3 may 2020. Many actions
XXX | P a g e
taken by many governments around the world, WHO praised the timely action by Indian Prime Minister
Narendra Modi and many people as a lockdown, because of the cure of the disease or in the absence of vaccine
to prevent the

virus from spreading was the best option. By the various institutions like IMF and World Bank,Central Banks
economists, fund managers and consulting firms from different countries have expressed their fears about the
devastating effect of lockdown in GDP world especially in general and emerging economics like India.

"The resilience of banks' asset quality in 2020 hinges in part on the success of governments' and regulators'
policy responses. These measures are in early stages. Some have started, some are in planning, and we suspect
many more may be in the wings," Gunning said.

Asia-Pacific governments, central banks, and supervisory authorities have rolled out diverse measures to
address COVID-19. These include liquidity injections, targeted loans to affected industries and regions, and
policy rate cuts. It also includes support for banks to provide forbearance to otherwise economically viable
households and businesses sideswiped by COVID-19.

RBI also allowed a repayment moratorium for three months on all term loans outstanding as on March 1,
2020, to borrowers of all commercial banks, including regional rural banks, small finance banks and local area
banks, co-operative banks, and NBFCs, including housing finance companies and micro-finance institutions.
"The equation underpinning policy responses is simple in theory but difficult in practice, and always comes at a
significant fiscal cost," Gunning noted.Covid-19 is a tremendous tragedy from both a health and economic
perspective, affecting all in its path. The pandemic may not only change our perspective on life, our priorities
and the way we work and interact…, it may also change the way we bank in the future.

Financial institutions were heavily affected by the 2008 credit crisis and today, after investing a decade in
digital transformation, they can play a key role during this challenging period by curtailing the economic
recession and supporting their customers, especially SMEs. Since early this year, the banking industry has been
faced with unprecedented challenges. The way banks address these challenges will determine their role in, and
contribution to, mitigating the effects of the current crisis.

Indian Banking system continuously framing reforms to minimize the effect of COVID-19. As total
world suffering from COVID-19 Pandemic. It will change the way the world works. It creates great depression.

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The Corona virus disease first time identified in Wuhan, the capital of Hubei China in December 2019 and
spread to the overall world. After observing its infection and increase the rate of death World Health
Organization declare as Pandemic on 11th March 2020.As seen current situation India is Widely affected from
Corona virus. According

to WHO currently confirmed cases of COVID-19 have been 7,273,958 reported in the World including 4,
13,372 deaths. In India 1, 37, 448 active cases of COVID-19, out of that 8,102 deaths declared as a government
of India. Total world goes into recession from COVID- 19.

Continuously rise in unemployment, High stress incurred on supply chain management. Completely
decreased the Government revenue. Suddenly downfall in Hospital and tourism industry. Reduced in consumer
buying activity. Drastically reduced in fuel consumption activity. Big companies in India like TATA Motors,
BHEL, Aditya Birla, Larsen and Turbo reduced their Industrial operation. Indian Banking sector get affected
from Corona Pandemic. Banks get outbreak due to novel Corona Virus. Borrowers and Industries face the
dangerous problem like job losses, slowdown in sales and decreased in the profit as virus spread in overall
India. Banking customer wanted some financial relief and Reserve Bank of India encouraging national banks to
provide the relief by framing good banking policies towards customer. For security issues amongst employees it
was decided to give facility for employees to work from remote areas.

World health Organization (WHO) has advised people to use contactless payment and avoid handling
banking note as much possible it was found that Corona virus live in Banking Notes for days and accelerating
spread of the decease. One of the good reforms started in India due to Corona virus is banks are anticipating this
shift towards Digital Marketing. Now in India people rely on Online Banking, Telephone Banking and call
centre’s Banks in India started working by dividing the people. At Bank level problem of Nonperforming Asset
has increased. Spike Increased on NPA in India. Currently NPA rate in India similarly to china like 2% but the
credit costs ratio could be worse. Indian Banking System converted from stable to negative, as continuously
disruption in economy activity caused by the COVID-19 pandemic and a decline in asset quality. From the
research it was known that quality of the asset continuously goes down from corporate Small and Medium
Enterprises (SME), and retail segment for lending to pressure on profitability and capital for lenders. Reduced
productivity and lockdowns have already started to take a toll on the financials of the corporate sector. Indian
Banks face so many challenges due to COVID -19 Pandemic.

XXXII | P a g e
 The total operating environment is negative due to uncertainty surrounding the severity Bank already
faced weak business and consumer confidence. Global risk aversion has hit the Indian Financial Market.
Reserve Bank of India is the apex body of India. RBI frame the monetary policy and give guidance to all public
sector and private sector banks. RBI issue the Bank notes and keeping of reserves with a view to securing
monetary stability in India and operate currency and credit system in India. RBI maintain price stability while
keeping growth of the country. Reserve Bank Of India announce COVID-19 Regulatory Package for all
commercial banks (including Small Finance Bank , Local Area Bank , Regional Rural Bank)

All Primary (Urban) Cooperative Banks / State Co-operative Banks/ District Central Cooperative Banks
All-India Financial Institutions ,All Non-Banking Financial Companies (including Housing Finance
Companies). COVID-19 created crises in India overall 1.5 trillion revenue loss.20 to 25% reduction in refinery
utilization. Fall in production due to shutdown, import restriction and labour unavailability.35-40 % reduction
in refinery utilization. Slowdown in pharmaceutical sector due to restriction in import. Closing the business of
small and medium dealers. Sharp decline in renewable energy sector due to lack of competitive price. Reduction
and postponement in capacity additions due to financial viability concern and global supply chain disruptions.
Government & RBI are continuous in action mode for providing relief to the people.

Government has announce 1.7 trillion package for the poor people who needs money for their livelihood
and food security. Many corporate employees lose their job due to COVID-19 Pandemic. Government are
continuously forming economic measure and strategy so the unemployment rate will reduce. Government has
also given instruction to many welfare agencies in India for strengthening their self and to support the society
for upliftment. Government also give concentration on municipal party. Gram panchayat for knowing the root
cause and find out the solution for minimizing the problem. Government also give emphasize on priority sector
like hospital, schools, service sector who takes loan from bank and they need support for survival.
Short Term Disruption in Indian Banking due to COVID-19 Pandemic.
1. Inability to access the data / Infrastructure, leading to reduce serviceability. 2. Temporary correction
in valuation of FIs, with an expected reduction in returns 3. Difficulty in accessing branches for
routine operation 4. Default in loan payment 5. Scaling down of non-essential operations 6.
Significant reduction in domestic and cross border trade.
Prolonged crisis in In Indian Banking due to COVID-19 Pandemic
1. Increasing preference for distributed workforce shared services 2. Raising need and preference for
digital transactions 3. Growing preference for health and life insurance policies 4. Accumulation of

XXXIII | P a g e
 surplus capital due to limited deployment opportunities 5. Increase loan defaulters due to reduce
revenue and margin.

The COVID-19 pandemic could be one of the most serious challenges faced by the financial services
industry in nearly a century. The COVID-19 impact on banking will be severe fall in demand, lower incomes,
and production shutdowns and will adversely affect the business of banks. The situation is exacerbated by staff
shortages, inadequate digital maturity, and pressure on the existing infrastructure as firms scramble to deal with
the impact of COVID-19 on financial services. Banks certainly have their hands full in light of the novel
coronavirus outbreak COVID-19. Borrowers and businesses face job losses, slowed sales, and declining profits
as the virus continues to spread around the world. Banking customers are likely to start seeking financial relief.

An obvious way that pandemics can impact financial systems is through their enormous economic costs.
To managing the direct economic impact of the coronavirus, banks need to have a plan in place to protect
employees and customers from its spread. Many banks are already starting to encourage remote working of
some employees. In this paper, we are aimed to demonstrate an impact of pandemic covid-19 on the banking
and financial sector. India’s coronavirus outbreak threatens a years-long clean up of its financial system,
according to the Indian bank. Banks sit at the heart of the economy and provide funding to corporate and
individuals. Their stability is crucial to keep the system up and running.

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 Review of literature
Covid-19 pandemic adverse impact the Indian economy. To control the flow of the virus, Government of
India announced a nationwide lock down and various policies to help the people. Dev and Sengupta have
analyzed the economic condition of the India before the Covid-19 along with policies that has been declared so
far and potential effect of the shock on several part of the Indian economy. Rakshit and Basistha have wrote an
article about economic effect of the outbreak in India by considering outbreak as a man-made disaster i.e.
human tragedy. They addressed three important research questions: the effect of Covid-19 on the Indian
economy along with the detailed analysis of the different sectors that suffered from Covid-19, the effect of
Covid-19 on the bilateral trade relationship between China and India, the performance of health system during
this pandemic. Kanitkar demonstrated the economic loss of India during Covid-19 by using a linear I/O model
and results shows that the loss is about 10-30% of its GDP. The author has also focused on the emission of CO2
from the power sector and electricity supply, demand. Demirguc-Kunt et al. have analyzed the effect of the
Covid-19 outbreak on the banking sector by discussing the bank stock prices all over the world along with
examine the role of financial policy by using global databases for the performance of bank stocks. The Covid-
19 data is available on the internet in various format. WHO provides multilingual Covid-19 database that
updates regularly and contains all the information about Covid-19. Kousha and the wall provided the access of
the coverage of scholarly databases and impact indicators from the period of 21.03.2020 to 18.04.2020 so that
people can identify the important new studies quickly from Covid-19 publications like news, tweets, citations,
Facebook, databases and many more places. To respond effectively to emergencies like public health, we need
to share the information across various disciplines and IT systems. This is the place where ontologies offer
excellent services and overcome the problem of interoperability. Along with the databases, various ontologies
also have been developed in order to exact the hidden and semantic information. Dutta and Debilis have
published the ontology as a data model namely COviD-19 ontology for case and patient information (called
CODO) on the web as a knowledge graph that provides the information about the Covid-19 pandemic. The
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primary focus of the CODO ontology is to describe the Covid-19 cases and Covid-19 patient data. Infectious
Disease Ontology (called IDO) is an interoperable ontology that contains the domain information about
infectious disease where entities are related to the clinical and biomedical aspects of the disease . The extension
of the IDO and Virus Infectious Disease ontology (VIDO) is called COVID-19 Infectious Disease Ontology
(known as IDO-COVID-19) and contains the information about the Covid19 disease and SARS-CoV-2 virus .
The available different format of data the available different format of data (text documents, video, audio,
databases and ontologies) contains the detailed information about the Covid-19 disease. After studying the
literature, we claim that the available databases and ontologies that provide information according to the user
queries do not have the complete information about the impact of Covid-19 on Indian banking sector that play
vigorous role in the growth of Indian economy.

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 Chapter:3 Research Methodology

Research is based upon effect of COVID -19 in Indian Banking Sector. As total world is suffering from the worst situation.

Indian Banking also affected. People repaying capacity of loan get reduced. GDP of India got down. Economy progress of

India got lower. Indian Government along with Reserve Bank of India is continuously in the process of developing new

policy which help to reduce impact of COVID-19.

Following are the objectives of Research Paper

1. To study the Change in RBI policy due to COVID-19.

2. To study the effect of COVID-19 in Indian Banking Sector.

3. To find out solution for Indian Banking system to face COVID-19 Pandemic. The Research is based on the

secondary data. For the Research paper data is collected from Reserve Bank of India Website, Reserve Bank of

India Manual, Guideline provided by RBI in their manuscript , Books , Internet , Magazines and Newspaper.

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4. RBI Reforms In India

4.1 COVID -19 Regulatory Package

By RBI Circular announced certain regulatory measures for overcoming from the COVID-19 Pandemic

Disruptions by forming provisions and Asset Classification Norms. In Announcement they declare providing

relaxation in repayment of debt and improving access to working capital management along with that RBI focus

on prevention of financial stress to the business holders, so that they continue their business in favorable

environment.

(i) Rescheduling of Payments Term Loans and Working Capital Facilities

For reducing the effect of COVID-19 Pandemic all commercial Bank (including regional rural
bank small finance bank and local area bank) , co-operative bank all India Financial Institution and
Non-banking Financial Companies (including housing finance provide relaxation for next 3 Month
i.e. 1st June 2020 to 31st August 2020 in payment of all Equated Monthly Installment (EMI) in
respect of term loan that includes agricultural term loan , Retail Loan , and crop Loan. For schedule
repayment such loan has residual tenor will be shifted to the board. Interest will continuously accrue
of the term loan during moratorium period. In respect of working capital facilities Reserve bank of
India decides to sanction in the form of cash credit and Overdraft. Commercial Banks decides to
relaxation in payments for another 3-Months from 1st June 2020 to 31st August 2020. On recovery
of interest applied in respect of all such facilities. Financial institutions are permitted, at their
prudence, to convert the accumulated interest for the postponement period up to August 31, 2020,
into a funded interest term loan (FITL) which shall be repayable not later than March 31, 2021.
Banking Industry suffering from stress as strong industry downturn and business closure. As a result
structural shift in banking policy and industry.

(ii) Provisions in Making Working Capital Financing

XXXVIII | P a g e
 Reserve Bank of India provide the facilities to pay the working capital loan in the form of Cash
Credit or to borrowers and minimizing stress of financial institution. This step has taken by RBI as a
measure for facing COVID-19 Pandemic. RBI declare us · 2020.This temporary arrangement done by
reserve bank of India till 31st March 2021. Reserve Bank of India continuously take the review for
sanctioning working capital limits up to 31st March 2021, based on Reassessment of working
capital cycle. The above measures will be contingent on the financial institute satisfy themselves
that the same needed on account of the economic fallout from COVID-19 pandemic. Further,
accounts provided relaxation under these instructions shall be subject to subsequent supervisory
review with regard to their justifiability on account of the financial economy fall down from COVID-
19 pandemic. Financial Institutions worked accordingly the policy that are framed by the board of
Reserve Bank of India.

(iii) Asset Classification

Reserve Bank of India decides to convert accumulated Interest into Funded Interest Term Loan and
change the credit policy of the borrower to particularly overcoming from COVID-19 Crises. RBI work on
resolution of stressed assets as direction getting from 7th June 2019 in prudential framework and relatively will
not result in downgrade of Asset Classification In respect of account classified standard on February 29 2020,
even if past due the COVID-19 Pandemic period. Wherever granted in respect of term loans, will be excluded
by the financial institutions from the number of days overdue for the purpose of asset classification under the
Income Recognition and Asset Classification (IRAC) norms. The asset classification for such accounts will be
identified on the basis of revised due dates and the revised repayment schedule. Similarly, in respect of working
capital facilities sanctioned in the form of cash credit/overdraft including Special mentioned Account.

4.2 Financial Institution form the reforms for Business Continuity.

1. Financial Institute provide COVID-19 insurance to the customer for facing unpredicted circumstance.

2. Financial Institution giving loan term relaxation to the public.

3. Financial institution work on data partnership for trade finance.

4. Financial institute provide plug and play non-financial services for Small Manufacturing Enterprises.

XXXIX | P a g e
5. Financial Institute work on to form comprehensive digital platform for customer service.

6. Financial Institute provide digital trade financing to the customer for giving effective service.

7. Financial institution work on home delivery of cash.

8. Financial Institute also work on Revamping of their Internal System. Migration to cloud system to enable
employee remote access.

9. By Managing Talent-Given assurance to employees for job security.

Challenges faced by the Banking Sector :

Credit Risk
There has been a noticeable surge in loan and debt restructuring requests during this period, particularly from
SMEs. Banks will need to rethink their approach to credit risk and credit scoring in order to adapt to the context
of the current situation and provide unprecedented levels of liquidity to the market. In parallel, regulators will
also need to relax some of the credit risk directives, at least in the short/mid-term.

Digital Banking
Many customers who were reluctant to engage digitally with their banks, have been “forced” to do it during
quarantine. As a result, banks have tripled their digital interactions with customers during this period. The main
challenge now is to ensure that they can provide customers with all of the basic services digitally, end-to-end
(On boarding, lending etc.), which was not the case for many financial institutions pre-covid 19.

Cyber Threats
Financial institutions are facing a potential increase in cyber-attacks and fraud attempts due to the growth of
digital banking interactions which is compounded due to employees working remotely from home/less secure
environments. Cyber and Fraud, albeit a key focus for the banking industry, will no doubt take centre stage.
Business Continuity
XL | P a g e
Banks have been compelled to adapt quickly during this pandemic, both internally and vis-à-vis their customers.
Banks that heavily invested in digital transformation over recent years are now reaping the benefits and seeing
the results of their investment. Despite cyber threats and a significant increase in digital interactions, keeping
their systems stable and reliable is a key focus of banks.

Crisis Management
Uncertainty and constant evolution require banks to make fast decisions and adapt quickly.
The way of working and interacting with customers and colleagues is changing…and banks need to be
particularly agile in order to keep up and adapt to the “new normal”.
In addition to adapting, in a record time, to the current situation, banks will undoubtedly face further challenges;
they will need to prepare for and minimise effects of the upcoming post-covid-19 economic recession.

Innovation: From “nice to have” to “must have”

Before the crisis some stakeholders within the banking industry still thought that innovation was a nice thing to
have, but not a necessity. Covid-19 may be one of, if not, the strongest of catalysts for digital transformation in
the banking industry since the internet revolution. I am convinced that from now on, innovation will be
perceived as a “must have” across all financial services organizations and the previous skepticism surrounding
innovation and digital transformation investments will diminish. The focus will, at least in the short and mid-
term, be on delivering end to end digital services rather than exploring cutting edge technologies for future use.
As is the case with most crises, while the current situation brings multiple challenges to the forefront, as
described above, it also brings with it many opportunities for banks.

Opportunities for the Banking Industry

Post Covid-19 Digital Customers

During the current crisis, many customers have been engaging digitally with their banks… for some of them,
for the first time. There is a huge opportunity for banks to retain these digital customers beyond the crisis,
especially SMEs and Retail. The level of the services provided by banks today will determine the percentage of
customers that will not revert back to the traditional physical channels when things eventually get back to
normal.

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Rethinking Cost Reduction Strategy
Many organizations realize that working from home can, in some cases, be more productive and therefore
financial institutions are considering the possibility of keeping a significant chunk of their workforce working
from home permanently, even after the crisis has subsided. This will create a win-win situation; increasing
employee engagement, satisfaction and work-life balance on the one hand while bringing significant cost
savings to banks on the other hand.
Only time will tell to what extent the financial industry’s actions have contributed to overcoming current and
future challenges associated with covid-19. For now, banks are demonstrating their ability to respond by
providing unprecedented levels of liquidity, adapting their organizations to support customers and employees in
record time and taking an active role from a socially responsible perspective.

Challenges faced by the Banking Sector :

Credit Risk
There has been a noticeable surge in loan and debt restructuring requests during this period, particularly from
SMEs. Banks will need to rethink their approach to credit risk and credit scoring in order to adapt to the context
of the current situation and provide unprecedented levels of liquidity to the market. In parallel, regulators will
also need to relax some of the credit risk directives, at least in the short/mid-term.

Digital Banking
Many customers who were reluctant to engage digitally with their banks, have been “forced” to do it during
quarantine. As a result, banks have tripled their digital interactions with customers during this period. The main
challenge now is to ensure that they can provide customers with all of the basic services digitally, end-to-end
(On boarding, lending etc.), which was not the case for many financial institutions pre-covid 19.

Cyber Threats
Financial institutions are facing a potential increase in cyber-attacks and fraud attempts due to the growth of
digital banking interactions which is compounded due to employees working remotely from home/less secure
environments. Cyber and Fraud, albeit a key focus for the banking industry, will no doubt take centre stage.
Business Continuity
Banks have been compelled to adapt quickly during this pandemic, both internally and vis-à-vis their customers.
Banks that heavily invested in digital transformation over recent years are now reaping the benefits and seeing
the results of their investment. Despite cyber threats and a significant increase in digital interactions, keeping
their systems stable and reliable is a key focus of banks.

XLII | P a g e
Crisis Management
Uncertainty and constant evolution require banks to make fast decisions and adapt quickly.
The way of working and interacting with customers and colleagues is changing…and banks need to be
particularly agile in order to keep up and adapt to the “new normal”.
In addition to adapting, in a record time, to the current situation, banks will undoubtedly face further challenges;
they will need to prepare for and minimise effects of the upcoming post-covid-19 economic recession.

Innovation: From “nice to have” to “must have”

Before the crisis some stakeholders within the banking industry still thought that innovation was a nice thing to
have, but not a necessity. Covid-19 may be one of, if not, the strongest of catalysts for digital transformation in
the banking industry since the internet revolution. I am convinced that from now on, innovation will be
perceived as a “must have” across all financial services organizations and the previous skepticism surrounding
innovation and digital transformation investments will diminish. The focus will, at least in the short and mid-
term, be on delivering end to end digital services rather than exploring cutting edge technologies for future use.
As is the case with most crises, while the current situation brings multiple challenges to the forefront, as
described above, it also brings with it many opportunities for banks.

10 decisions taken by RBI to counter the corona virus impact on economy

The Reserve Bank of India asked all lending institutions to allow three month moratorium on EMI
payments in order to infuse liquidity into the system amid novel corona virus crisis. RBI governor
Shaktikanta Das in a press conference said these are extraordinary circumstances , and unprecedented
measures are required to support the sagging economy as all the economic activities have come to a halt.

1. Repo Rate - RBI announced that it was cutting the Repo rate by 75 bps, or 0.75% to 4.4. the
Repo rate was earlier 5.15;last being cut in October 2019.

2. Reverse Repo- The regulator also announced that it would cut the reverse repo rate by 90 bps,
or 0.90%. on a daily average , banks had been parking Rs 3 lakh crore with the RBI. The current reverse
repo rate was 4 %.

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3. Loan Moratorium - In a massive relief for the middle class, the RBI Governor also announced
that lenders could give a moratorium of 3 months on term loans, outstanding as on 1 march , 2020. This
is applicable to all commercial banks including regional , rural, small finance, co-op bank, all India
financial institutions and NBFCs including housing finance and microfinance.

4. CRR- The RBI also announced that the cash reserve ratio would be reduced by 100 bps, or 1% ,
to 3%. This would be applicable from March 23, and would inject Rs.137,000crore.

5. LTRO -The RBI will also undertake long term Repo operations; allowing further liquidity with
the banks. The banks however are specified that this liquidity will be deployed in commercial papers,
investment grade corporate bonds and non -convertible debentures.

6. Ease of working Capital financing- Lenders were allowed lending to recalculate drawing
power by reducing margins and / or by reassessing the working capital cycle for the borrowers. The RBI
also specified that such a move would not result in asset classification downgrade.

7. Working capital interest -A three month interest moratorium shall also be permitted to all
lending institutions.

8. Deferment capital interest- The net stable funding ratio, which reduces funding risk by
requiring banks to fund their activities with sufficiently stable sources of funding was postponed to
October 1, 2020. The NSFR was earlier supposed to be implemented by April 1, 2020.

9. MSF- Marginal standing facility has also been increased to 3 % of SLR, available till June
30,2020. This measure should provide comfort to the banking system by allowing it to avail an
additional 137000 crore of liquidity under the LAF window in times of stress at the reduced said the
RBI.

10. Fresh Liquidity - The impact of all the announcements today shall inject almost 3.2% of GDP,
the Governor said in his brief today. The RBI also added that since February 2020 it had injected Rs 2.8
lakh crore of liquidity , equivalent to 1.4 percent of GDP.

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Findings :

1. Government take initiative by announcing Rs. 1.7 trillion relief packages for the poor people that
includes cash transfer and food security

2. Financial Institution declare larger corporate bail out packages

3. Government Introduce emergency / drastic measures for economic survival.

4. Indian government strengthening administrative machinery to effectively distribute benefit of welfare

program.

5. Indian government Increasing empowerment of local bodies for effective crisis management of crisis.

6. Government push priority sector by providing lending from banks.

7. Reserve bank of India provide 3-Month Moratorium period for paying term loans

8. Reserve Bank of India provide relaxation in Asset Classification Norms to the public and private
sector Banks.

9. RBI gives the guidelines for institution of operating limits for customers for structural strengthen

10. Reserve Bank of India reduced REPO Rate by 90 BPS.

11. RBI Reduced further REPO Rate by 2-3%

12. Reserve Bank of India Sustained REPO Rate reduction to near zero level.

13. RBI work on through 25000 careers. Long Term Repo Operation (LTRO)

14. Reserve Bank of India make further infusion of domestic liquidity through dollar SWAPS LTRO

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 CHAPTER:3

CHAPTER:4

conclusion

CHAPTER:5

The spread of COVID-19 represents an unpresented global shock, with the disease itself and mitigation efforts –such as

social distancing measures and partial and national lockdowns measures– both having a significant impact on the

economy. In the immediate aftermath, the financial sector, particularly banks, were expected to play an important role

in absorbing the shock by supplying vital credit to the corporate sector and households. In an effort to facilitate this,

central banks and governments around world enacted a wide range of policy measures to provide greater liquidity and

support the flow of credit. An important policy question is the potential impact of these countercyclical lending policies

on the future stability of the banking systems and to what extent their strengthened capital positions since the global

financial crisis will allow them to absorb this shock without undermining their resilience. In this paper, we use daily stock

prices and other balance sheet information for a sample of banks in 53 countries to take a first look at this issue. Our

contribution is twofold. We first assess the impact of the pandemic on the banking sector and investigate whether the

shock had a differential impact on banks versus corporates, as well as those banks with different characteristics. Second,

using a global database of financial sector policy responses and an event study methodology, we investigate the role of

different policy initiatives on addressing bank stress as perceived by markets, in the aggregate, as well as across different

banks. Our results suggest that the adverse impact of the COVID-19 shock on banks was much more pronounced and

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 long-lasting than on the corporates as well as other non-bank financial 28 institutions, revealing the expectation that

banks are to absorb at least part of the shock to the corporate sector. Furthermore, larger banks, public banks, and to

some extent better capitalized banks suffered greater reductions in their stock returns, reflecting their greater

anticipated role in dealing with the crisis. Banks with lower pre-crisis liquidity and oil sector exposure also suffered

greater reduction in returns, consistent with their greater vulnerability to such a shock. Investigating close to 400 policy

announcements between February and April 2020, we next evaluate the impact of liquidity support, prudential

measures, borrower assistance and monetary policy measures on bank abnormal returns. Our results suggest liquidity

support and borrower assistance measures had the greatest positive impact on bank abnormal returns. Illiquid banks

benefited most from liquidity support, whereas larger banks and public banks saw increased abnormal returns with the

announcement of borrower assistance policies. However, since they rely on fiscal expenditures, these policies did not

result in positive impact on bank stock prices in developing countries where there is less room for fiscal expansion.

Prudential measures appeared to have a negative impact on bank returns, suggesting that markets price the downside

risk from depletion of capital buffers. Finally, policy rate cuts and assets purchases mostly benefited illiquid banks and

public banks, confirming that monetary policy again played a key tool during this crisis. Overall, our results suggest that

the crisis and the countercyclical lending role they are expected to play has put banking systems around the world under

stress, having a differential impact depending on their characteristics and pre-crisis vulnerabilities. While some policy

measures such as liquidity support, borrower assistance and monetary easing moderated this adverse impact for some

banks, this is not true for all banks or in all circumstances. For example, borrower assistance measures exacerbated the

stress for banks that operate in countries with little 29 fiscal space. These vulnerabilities will need to be carefully

monitored in the coming year as the pandemic continues to take its toll on the world economies.

Financial Institution facilitate a conducive healthy environment to the employees and reskilling of the employees on new

processes for ways of working. They enhancing customer centric approach through digital channels. RBI frame the policy

for ensuring business continuity, Engage in partnership to optimize process and enhance experience. Reprioritize sectors

and customer segment based on growth and risk profile. As situation change due to COVID-19 pandemic government

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 encouraging people to design innovative business model for the new industry environment. Focusing on build robust

digital ecosystem leveraging latest technology.

bibliography

REFERENCES: (Sample model)

Books:
1. Patnaik V.C & Manaj Patnaik, (2008)“Profitability in Public Sector Banks”, Sonali
Publications, New Delhi, ISBN: 145679087
2. Suryachandra Rao.D, (2010)“Banking Reforms in India: An evaluate study of
performance of Commercial Banks” Regal Publications, New Delhi New
3.Ravi Kumar V.V. (2010),Trends in Banking, Indian Institute of Banking & Finance, ISBN:
78564321
4. Romeo S. Mascarenhas (2011) ,Innovations in Banking & Insurance, Seth Publications,ISBN: 78953242
5. Gordon & Natrajan(2005), Financial Service Management , Tata McGraw– ISBN: 87690432

Journals:
1.Biresh K Sahoo and Anandadeep Mandal (2011)- Examining the Performance of
Banks in India: Post Transition Period, The IUP Journal of Bank
Management, Vol. X, issue 2, pages 7-31, ISSN:9076323
2.Dr. Ashok Khurana, Kanika Goyal (2011)- Performance of Public Sector Banks: An
Analysis IJBEMR Volume 2, Issue 2, ISSN: 453189766
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3.Dr. N. Bharathi (2010), “Profitability Performance of New Private Sector
Banks-An Empirical Study”, Indian Journal of Finance, Vol. 4, No.3, pp. 16-24., ISSN:9876098
4.Jyoti Saluja and Dr. Rajinder Kaur (2010), “Profitability Performance of Public
Sector Banks In India”, Indian Journal of Finance, Vol. 4, No.4, pp. 17-25., ISSN:54378965

Websites:
www.rbi.org.
www.bseindia.com
www.iifb.com
www.ubi.com
www.axisbank.com
www.banknetindia.com

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