A summer internship Report on

Impact of Covid-19 on Banking Sector

At

Submitted in partial fulfillment

Of the requirement of the degree of

Master of business administration

Submitted By

HILERI JOSHI
ROLL NO: 119044

Under The Guidance of

(Dr. Mamta Brahmbhatt)

2019-21

B.K. School of professional & Management Studies, Ahmadabad

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 CERTIFICATE OF COMPLETION

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 CERTIFICATE
This is to certify that ‘Ms. Hileri joshi, student of Full Time MBA (2019-2021 Batch) at B. K.
School of Professional and Management Studies, Gujarat University, Ahmedabad have prepared
a Summer Internship Report on “Impact of covid-19 on banking sector” in partial fulfillment of
two years full-time MBA Program of Gujarat University. This project work has been undertaken
under the guidance of ‘Dr. Mamta Brahmbhatt’, Associate Professor at B. K. School of
Business Management Studies, Gujarat University, Ahmedabad found satisfactory.

Date: Dr. Mamta Brahmbhatt

Place: Ahmedabad BKSPMS, Gujarat University

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 DECLARATION
I, Ms. Hileri joshi, studying in the first Year of Master of Business Administration
From B.K School Of Professional and Management Studies hereby declare that I have completed
the project titled “IMPACT OF COVID-19 ON BANKING SECTOR.”

I further declare that the information presented in this project is true and original to the best of
my knowledge.

Date:

Place:

Signature

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 ACKNOWLEDMENT

This Summer Internship Program has been an excellent opportunity for learning and professional
development. It allowed me to put my learning to use to achieve the objectives of this project.
The successful completion of project is generally not an individual effort. It is an outcome of the
cumulative efforts of number of people. This section is vote of thanks and gratitude towards all
those who have directly and indirectly contributed in their own special way towards the
completion of this project.

I would like to give my vote of thanks to Prudent Broking for providing me an opportunity and
permission to work with your corporation. It has been great experience and exposure towards
work after connecting with Prudent Broking.

I provide my special gratitude towards my corporate mentor, Mr. Parth Parekh for providing
me a constant guidance in during my summer internship training at prudent broking. His
insights and training has helped me to explore the corporate world and also for knowing the
various aspects of my report.

I would also like to thank my faculty mentor, Dr. Mamta Brahmbhatt under whose guidance I
have completed my summer internship project. Thank you for showing me the perfect direction
towards my project goal. Without you it wouldn’t be possible to give project its appropriate
structure.

At last I would be thanking all the people who have helped me directly or indirectly to fulfill my
SIP report.

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 EXECUTIVE SUMMERY

This report is about summer internship at Prudent Broking. The report mainly shows research
on “Impact of COVID19 on banking sector”. The main objective of project report is to know the
effects of pandemic and analyze the before and after changes in the sector. How impacts get deep
and shallow and what kind of steps are taken to reduce the worse impact and stabilize the
situation.

The report starts with introduction to the company which is broking and consultancy firm,
followed by the topic of the research i.e. impact of covid 19 on the banking sector and to further
support the study need of research is drawn down. Various literature reviews has been
considered for completion of this research that gives a brief about the relevant researches done
towards this topic. The research methodology and related aspects are covered separately in the
following part. The analysis & findings stand at the core of the report followed by conclusion.

The project research is majorly based on secondary data collected from numerous sources like
articles, reports by govt. institutes etc. Here, Indian banks are taken into consideration. In the
research all over banking sector impact is considered as a whole and descriptive data is analyzed.
Before and after data are shown so that clear output can be generated.

The major findings of same are highlighted. Some suggestion and positive negative impact are
also measured which are mentioned in the end of the report.

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 TABLE OF CONTENT

SR no. Particulars Page no.

1 Title page 1
2 Company Certificate 2
3 Faculty certificate 3
4 Declaration 4
5 Acknowledgement 5
6 Executive Summery 6
Chapter 1 Introduction to Company 8
Chapter 2 Literature review 14
Chapter 3 Introduction to banking sector 17
Chapter 4 Banking v/s covid-19 21
Chapter 5 Research methodology 24
Chapter 6 Data analysis and interpretation 26
Chapter 7 Findings and conclusion 37
Chapter 8 References 40

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Chapter 1
Introduction to the company

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1.1 About the company:

Name: prudent broking

Company type: private
Broker type; full service broker
Head quarters: Ahmedabad, Gujarat.
Founder: Munjal Jayant Mehta
Established year: 2004
Website: https://www.prudentbroking.com/AboutUs.aspx

Prudent Broking is a private stock broking and depository participant service, provider. It is also
a member of NSE, BSE, MSEI, and CDSL.

Prudent Broking has 20 different branches with Headquarters in Ahmedabad, Gujarat. This
company is known to provide secure and powerful technology over different platforms. Prudent
broking with 650+ channel partners provides powerful and secure technology products across
mobile, tablet, desktop and websites.

Market research and insight plays an important role in right investment decision making and
Prudent Broking believes exactly the same. It has created different tools so that the clients meet
their goals.

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PRUDENT BROKING actively offers services in:

• Equity

• Commodity trading

• Insurance

• Advisory services

• IPO

1.2 Applications of prudent broking:

1. PruBazaar:

Prubazzar is a mobile trading app for the clients who are always on the go. NetNet
is online trading platform for clients who want to trade at their own place. It is a main
application open for investors. App contains:
• 5000+ installers
• Application size 21 MB
• Update frequency of 4-5 months
• Overall ratings of 4 stars

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 2. Other applications:
A. PRUALPHA

PruAlpha is a long only strategy where

• Entry and exit will be purely based on technical analysis; (i.e. study of charts)
• It is a delivery-based product; (i.e. no derivative/leveraged position)
• The stock will be selected based on the predefined technical indicators. Broadly the stock which
are in overall uptrend and are breaking out are a consolidation phase, will be considered
• The stocks having average 20-day volume of 2 lac or more will be considered
• Typical holding period for a stock will be around 15-20 sessions. The holding period might reduce
/ go up if the target is achieved / stop-loss is hit earlier / later.
• Typically, the stop-loss level would be in the region of 5-10% which will be considered on closing
basis while target would be in 7-15% range
• Each stock will be allocated 7.5% of total corpus

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 B. PRUGROW
• Pro-Growth-Money-Management
• An Investment Strategy That Gives The Best Of Both Worlds
• PRUGROW works on a unique strategy, which combines both fundamental and technical
analysis to generate superior return compared to index.
• The idea is to select a “fundamentally sound stock” which is also technically bullish i.e. looking
strong on chart. Better known as TECHNO FUNDA calls.

C. WISHBASKET
• WiseBasket is a pre-researched portfolio of stocks with weights assigned to each stock in the
portfolio. The basket could be based on an idea, theme or strategy.
• Wisebasket is conceptualized to solve two key problems of investors…
1. Which stock to buy?
2. What should be the weightage of that stock in the overall portfolio?
• Investors receive advice from different sources like Relationship Managers, Friends, Brokerage
Research Reports, Neighbors, and Television Anchors etc. This creates bigger confusion on what
to buy or not to buy.
• The research team at WiseBasket not only helps you to find the best quality stocks, they also
determine the appropriate weightages to be assigned to each stock. The combination of both
these factors helps investor to manage risks while generating returns.

D. PRUIDEA

PruIdea is a fundamental product recommending stocks with a long-term view.

Process to select Stocks in PruIdea
• Reading Annual Reports.
• Listening to Conference Calls of Management post reporting of Quarterly Results.
• Doing Channel Checks by Inquiring through Dealers and Distributors.
• Analyzing Free Cash Flows & Performance over Different Cycles.
• Analyzing the Competitors & Threats.
• Referring to Industry Research Reports.
• Making Financial Models for Future Projections.
• Deriving at Target Price using Relevant Valuation Techniques.
• In addition to this, we look for red flags such as excessive managerial remuneration, promoter
pledging, related party transactions, negative free cash flows in order to avoid companies wherein
there could emerge corporate governance issues.

1.3 Research tools by prudent:

Prudent broking believes that market research and insights plays key role in the right investment
decisions following are some research tools created by in-house research team, which helps the
clients to achieve their investing and trading goals.

1. Morning mantra
2. Evening edition
3. Derivative dairy

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 4. Weekly wisdom
5. Special reposts

1.3 Advantages and disadvantages:

a. Advantages:

Wide Range Of Services - the company offers a varied range of services to their clients
right from the broking services, insurance sector and realty sectors.

The client gets a range of services under one roof, and therefore, does not need to look
anywhere else for any sort of financial services and real estate solutions.

Customer Care Service - the company has set in place back office support as well as,
attentive customer care service to assist the clients in the trade, as well as any queries
related to the trade, products and so on.

On their website, Prudent has given the address of head office along with phone number
and email ID

Well Researched Reports - Through their string of reports, the company makes sure
that the clients are well informed and aware of all the development happening around
even before starting to trade.

Trading platforms - Prudent Broking offers their clients all the available options for
trading. A client can easily download the set up for ODIN Diet and ODIN Terminal from
their website. They also have a Smartphone app for trading.

b. Disadvantages:

No Fee Breakup - a potential client always wants to know about the brokerage and
other costs that they would need to pay while trading. However, Prudent Broking is not
transparent about this particular aspect and can pitch in any specific number.

No Live Chat - Prudent Broking is yet to start the live chat sessions with the clients.

The service is considered utmost important for the organizations, who offer
financial products and services, as the clients are not always well versed with these
products. Also, its website lacks the customer care options, when it comes to encouraging
potential investors, ie. there is no request a call or something similar

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 Chapter 2: literature review

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 1. COVID-19 PANDEMIC AND LOCKDOWN IMPACT ON INDIA'S BANKING
SECTOR: A SYSTEMIC LITERATURE REVIEW June 2020
• In book: COVID-19 Pandemic: A Global Challenge (pp.21-32)
• Publisher: Aryan Publication, New Delhi
In this paper, how the situations have changed because of lockdown and what are the views that
are upcoming the economy is shown. Also the various opinions are shared of well-known
publishers which help a person to clearly see the picture. The steps taken by various banks and
the RBI are shows the major findings. Various reports are also shown in this paper.

2. Impact of COVID-19 on Indian Industry: Challenges and Opportunities

Mr. Girish Jadhav, Assistant Professor,
Navinchandra Mehta , Institute of Technology and Development, Dadar.
In this research paper what other kinds of sectors which are not related to baking sector directly
are affected are shown. From which we can get an idea what an others sectors are facing. How it
will be affected to banking sectors. For example if a supply chain system doesn’t work, then
there will be impact of banking credit facilities as the facilities are mostly works on credit
periods.

3. GST AND INDIAN BANKING SECTOR -ISSUES AND CHALLENGES

Dr. Veershetty G Rathod

Assistant Professor, M.com., Ph.D. Sahyadri Commerce & Management College Shivamogga
Anjesh H L
Research Scholar, Sahyadri Commerce & Management College

The introduction of GST would be a significant step in the reform of indirect taxation in
India Amalgamating several central and state taxes into a single tax would mitigate
Cascading or double taxation, facilitating common national market. It is expected that service
sector will have major impact of GST than other sector. Banking Sector plays a very important
role in monetary policies of country overall frame work and the business dynamics of this sector
will largely differs from other sectors. In this paper attempt has been made to know what are
issues and challenges faced by Indian banking sector after implementation of GST.

4. The intellectual capital performance of the Indian banking sector

G. Barathi Kamath,Journal of Intellectual Capital

ISSN: 1469-1930, Publication date: 23 January 2007

The study confirms the existence of vast differences in the performance of Indian banks in
different segments, and there is also an improvement in the overall performance over the
study period. There is an evident bias in favors of the performance of foreign banks compared

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 with domestic banks. A review is conducted of the international literature on intellectual
capital with specific reference to literature that reviews measurement techniques and tools,
and the VAIC™ method is applied in order to analyze the data of Indian banks for the
five‐year period. The intellectual or human capital (HC) and physical capital (CA) of the
Indian banking sector is analyzed and their impact on the banks' value‐based performance is
discussed.

5. Impact of Covid-19 on the Indian Economy: An Interim Assessment

S. Mahendra & Dev Rajeswari Sengupta, Indira Gandhi Institute of Development Research
(IGIDR)
The outbreak of the Covid-19 pandemic is an unprecedented shock to the Indian
economy. The economy was already in a parlous state before Covid-19 struck. With the
prolonged country-wide lockdown, global economic downturn and associated disruption of
demand and supply chains, the economy is likely to face a protracted period of slowdown.
The magnitude of the economic impact will depend upon the duration and severity of the
health crisis, the duration of the lockdown and the manner in which the situation unfolds once
the lockdown is lifted. In this paper they describe the state of the Indian economy in the pre-
Covid-19 period, assess the potential impact of the shock on various segments of the
economy, analyze the policies that have been announced so far by the central government and
the Reserve Bank of India to ameliorate the economic shock and put forward a set of policy
recommendations for specific sectors.
6. Determinants of Profitability of Banking Sector in India

• Majid Karimzadeh,
• S. M. Jawed Akhtar &
• Behzad Karimzadeh

Transition Studies Review volume 20, pages211–219(2013)

Profitability in banking sector is affected by numerous factors. These factors can be

internal or external. In this research we shall try to examine the most important factors
that may stem from both internal and external factors, which affect profitability of Indian
banking sector. For this study a balanced panel data set is used that is drawn from Indian
banking industry. The data is compiled for the purpose of investigating the nature of the
relationship between the profitability and the factors that determine profitability of banks
in India. The results of the study clearly demonstrate a close correlation between both
internal and external factors and the level of profitability of banks in Ind

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 Chapter 3: Introduction To
Banking Sector

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3.1 History of banking sector in India:

A financial system is an important tool for a country that wants to develop economically. The
banking system plays an important role in promoting economic growth not only by channeling
savings into investments but also by improving allocative efficiency of resources. Banking in
India has been the backbone to so many businesses in the past as well as the present times. It
started in the 18th century. The period between 1906 and 1911 saw the establishment of banks
inspired by the Swadeshi movement. The Swadeshi movement inspired local businessmen and
political figures to found banks of and for the Indian community.

A number of banks established then have survived to the present such as Bank of India,
Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. In the
initial years the three presidency banks, Bank of Bombay, Bank of Bengal, and Bank of Madras,
came together and amalgamated to form on a bank called Imperial bank of India. Till 1955, the
bank was private. Then the Imperial Bank of India was nationalized. It is now known
everywhere as State Bank of India. Thus, among all the banks existing today, State Bank of India
is the oldest one.

3.2 What Is a Bank?

A bank is a financial institution licensed to receive deposits and make loans. Banks may
also provide financial services such as wealth management, currency exchange, and safe deposit
boxes. There are several different kinds of banks including retail banks, commercial or corporate
banks, and investment banks. In most countries, banks are regulated by the national government
or central bank.

KEY TAKEAWAYS

• A bank is a financial institution licensed to receive deposits and make loans.

• There are several types of banks including retail, commercial, and investment banks.
• In most countries, banks are regulated by the national government or central bank.

3.3Banking structure in India:

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.

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 Indian Banks are classified into commercial banks and Co-operative banks. Commercial
banks comprise: (1) Schedule Commercial Banks (SCBs) and non-scheduled commercial banks.
SCBs are further classified into private, public, foreign banks and Regional Rural Banks (RRBs);
and (2) Co-operative banks which include urban and rural Co-operative banks.

Currently, there are a total of 34 banks functioning in India of which 12 are public
sector banks and rests 22 are private sector banks.

3.4Banking sector and Indian economy:

The banking sector is nothing less than the backbone of any economy. This
pertains to the Indian economy as well, where the banking sector is displaying the
potential for becoming the 5th largest banking industry globally by 2020.

• In GDP banking sector contributes 7.7%.

• Banking sector almost contributes 1.5 million employments in economy. This shows
almost 25-30% of the total.
• Provides financial assistance to industries through various govt. schemes.
• Provides guidance for funds by contributing monetary policies.
• Promotes new enterprises by provides small, large, midterm loans.
• RBI decides the repo and reverse repo which manages the flow of money in the
economy.

Public sector banks’ assets stood at Rs 72.59 lakh crore (US$ 1,038.76 billion) in FY19.
During FY16-FY20, credit off-take grew at a CAGR of 13.93 per cent. As of FY20, total
credit extended surged to US$ 1,936.29 billion.

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 During FY16-FY20, deposits grew at a CAGR of 6.81 per cent and reached US$ 1.90
trillion by FY20. Credit to non-food industries increased 3.3 per cent y-o-y, reaching US$
1.26 trillion on February 28, 2020 and US$ 1.42 trillion on March 13, 2020.

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 Chapter 4:
Banking Sector V/S Covid 19

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4.1Covid 19:
In India covid 19 pragmatic broke out on 24th of March, then 21 day lockdown was
implemented but still it is on in states. As lockdown was very necessary for saving lives of the
people, it made a huge impact on the every sector of an economy whether it is industrial sector or
service sector, major impacts are being seen. In service sector the backbone if we can say is a
banking and financial sector.

This paper is made to show what impact is done on the banking sector due to lockdown which
has resulted into closure of industrial firms, education centre, even the private office work. The
secondary data is being used for the report and decision taken by various banks shows the
conclusion of the report.

4.2Covid19 v/s BFS matrix:

Banking sector is related with many other industries for trading, growth, development
purpose. So, if one sector gets affected that makes effects on banking sector. A matrix is being
developed so that industries with positive or negative impact can be known and from that
profitable investments can be performed.

In matrix x-axis shows the severity of impacts i.e. high or moderate. While y-axis shows
the speed of recovery i.e. slow or past and every phase is given the name for it.

Matrix is divided into 4 parts:

1. Aggressive cost take out stage:

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 In this stage impacts of paramedic is also high and speed of recovery is low which
shows that in long damage in the industries related.
Banking services related to industries affected are…
1. Real estate
2. Stock exchanges
3. Brokerage corporation collaboration services
4. Hedge fund services

2. Moderation stage
This stage shows the impacts high and speed of recovery high which means that
the industry services will recover very fast in short or midterm but the impacts
will be seen in profitability for longer period of time.
1. Commercial payments
2. Auto loans
3. Trade finance
4. Assets management is some of the examples of it.

3. Transformation stage
Banking finance services like
1. Private equity
2. Wealth management
3. Retail transaction banking

Are having moderate impact of the pandemic but recovery rate is lower than
others.

4. Growth stage
This stage represents the impact very low and the recovery at the high speed so
services will be at normal level as this pandemic gets over.
1. Personal loan
2. Credit cards
3. Traditional term loans
4. consumer payments
5. SME trades are the example of it.

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Chapter 5: Research Methodology:

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5.1 Objective of research:
Main objective:
Know the impact of covid 19 pandemic on banking sector.
Other objective:
• Due to covid what is the impact on all over economy.
• To know the stock market impact
• How government initiatives helped to cope up with the situation.

5.2 Methodology:
In this report research my intension is to show is the impact on the credit facilities, loan
rates, and different income rates changes in banking sector due to covid 19.
Some of the facts and figures are taken to draw a clear picture of my purpose.
In this report my focus would be to show:

a. Growth rate
b. RBI rates
c. Other rates
d. NPA performance
e. Profitability changes
f. Stock highlights in the covid

The data is compared with previous year so that comparative measures can be easy.

5.3 Data collection:

The report is completely based on secondary data that has been collected from various sources.
The current research is quantitative in nature which can be further classified as a descriptive
research design.

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 Chapter 6:
Data analysis and interpretation

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 6.1 Growth rate of banking sector as whole:
Indian GDP 2018-19 2019-20

In Rs.(lakh cr.) 140.78 147.79

growth rate of banks 2018-19 2019-20

in % 7.1 6.7

growth rate

2019-20 6.7

2018-19 7.1 in %

6.5 6.6 6.7 6.8 6.9 7 7.1

Analysis:

As we can see the overall growth rate has decreased in this pandemic for about 0.3%.which
makes drastic changes in the number at a large picture i.e. almost 11 lakh cr. for whole sector.

6.2 RBI RATES :

In RBI there are two rates which are highly taken into consideration are repo rate and reverse
repo rate.

When RBI gives a loan to banks the interest charge is repo rate.
And vice versa if banks gives loan to RBI then it suggest interest as reverse repo rate.

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Rate 2019 2020
repo rate 6.00% 4.00%
reverse repo rate 5.75% 3.35%

RBI rates
7.00%
6.00%
6.00%
5.00%
5.75%
4.00% 4.00%
3.00%
3.35%
2.00%
1.00%
0.00%
2019 2020

reporate revese reporate

Other rates:

other rates 2020 2019

SLR 18.50% 19.35%
CRR 3.00% 4.00%
BANK RATE 4.65% 4.65%

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 other rates
CRR BANK RATE SLR

19.35%
18.50%

4.65% 4.00% 4.65%

3.00%

2020 2019

Analysis:

• Repo rate is decreased for about 2% which makes the money flow available to the market
at the cheaper cost for the banks.
• This will infuse liquidity in the markets, helping business running short on funds due to
the corona virus lockdown.
• Reduction in reverse repo rates makes it less attractive for banks to deposite excess funds
with RBI. So, banks will be attracted to lower some of their rates for loans and In return
people will get the loans easily available from the banks at lower level.
• For example: SBI home loan interest rate decrease
Past rate current rate
For loan up to 30 lakh – 7.4% 7%
For loan 30-75 lakh- 7.65% 7.25%
For loan >75 lakh - 7.75% 7.35%
• When CRR is reduced, schedule commercial banks would have more cash at their
deposal. This increases lending ability of banks which in turn increases liquidity as the
cash flow increases.
• When CRR is reduced, banks sanction more car loans, home loans.
• By reducing the level of SLR, the RBI can increase liquidity with the commercial banks,
resulting in increased investments. SLR is reduced to fuel growth and demand.

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 • Reduced SLR would provide banks with more funds to lend as they won’t have to
mandatorily invest in govt. securities which intern increase the investment in economy
and also increase the profit for banks.
• No changes are made in bank rates.

RBI initiatives for stabilizing the situations:

6.3Bad loans estimations:

What is a bad loan?

Bad loans are loans were the debtor is not making payments. Banks will try to collect the
payments and get the loans back to current state

When loans are not paid and the currents assets of debtor is not enough to make the principle
amount it generates NPA i.e. nonperforming assets.

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Due to covid -19 there were the major possibilities that corporate, MSMEs SMEs or individual
business may get affected and may be turned into bad loans and then NPAs. Which will strong
reason for liquidity deficiency and to affect the economy at very bad aspect.

According to one report of RBI dated on July, 25 2020

“According to the central bank, bad loans could rise from 8.5% in March 2020 to 12.5% by
March 2021 under its baseline scenario, and 14.7% if the stress is severe.”

Moratorium: A solution to resolve defaults

What does moratorium on loan mean?

Moratorium period refers to the period of time during which you do not have to pay an EMI on
the loan taken. This period is also known as EMI holiday. Usually, such breaks are offered to
help individuals facing temporary financial difficulties to plan their finances better.

This measure was taken by the central bank to provide some relief against the covid-induced
financial crisis.
The extension of the three-month EMI moratorium on repayment of term loans means that
borrowers will not have to pay their loan EMI installments during such period as prescribed by
the RBI.

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Why moratorium?

If in crises where all the jobs, services were shut and no one had even work at that moment if
loan recoveries were considered there might be a possibility that defaults in loans may increase
and there might also be possibility to increase in NPAs

Picture below shown shows the loans under moratorium outstanding, if they were not given this
kind of EMI holiday there might be chances for banks of defaults and chances for business for
getting out of work.

6.4 Demand and supply of loans – why there is still unbalance?

Credit loans cycle:

Following chart shows how generally credit loan demand works.

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 • takes the credit loans - production - selling - earnings-payback
corporate of loan
loans

wholesale
• whole sellers earns from retailers.
loans

• Most of the momentum to credit growth was coming from

loans retail customers were taking.
retail loans

• These were typically being taken by individuals buying homes,

personal
personal cars, and other consumer durables like televisions,
loans refrigerators etc.

In the pandemic of COVID19 what happens is Demand for most commodities for which
individuals would have typically taken a retail loan is likely to fall sharply which in turn falls
the demand of corporate loans.

For example,

In terms of financing penetration, almost all commercial vehicles are financed, as are 75% of
all passenger vehicles, and almost every second home (new units); this dip in demand
completely shuts off the demand for retail loans.

Following chart shows the growth of retail and wholesale loans:

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Why personal loans are decreased?

In the pandemic people don’t have money to spend even in the situations the demand for assets
decreases which results into fall in the loan demand.

The demand decrease in the various assets is shown below:

Assets New Passenger Commercial Two Consumer

housing cars vehicles wheelers durables
units
Demand -45% -25% -24% -22% -17%
Decrease

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 0%
-5% Demand Decrease
-10%
-15% -17%
-20% -22%
-25% -24%
-25%
-30%
-35%
-40%
-45% -47%
-50%
new
passenger commercia two consumerd
housing
car l vehicle wheelers urables
unit
demand decrease -47% -25% -24% -22% -17%

Supply of loans:

It is a valid question why banks, which are flush with cheap money, are not aggressively
pushing for loans in the economy.
Simply put, banks are increasingly risk-averse. Moreover, they do not know which firm
will survive the COVID-19 disruption and which will flounder. The irony is that banks may be
willing to give loans to the bigger firms but these companies do not need new loans because they
already have excess capacity while smaller firms, which are in dire need of funds, appear too
risky for banks’ appetite.
In this regard, the regulatory forbearance, in the form of a three-month-long moratorium
on paying back loans, has made it difficult for banks to assess which firms are poor are managing
their business and finances in this period.

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6.5impact on stock valuations:

• Due to covid -19 there are some banks which adjusted book value prices has fallen some %
e.g. HDFC’s are estimated to fall up to 22%.While return on average assets (ROAA) could
dip 25-70 bps in FY21
• Corporate rated BBB or below (pre-Covid-19) or where earnings before interest, tax,
depreciation, and amortization (EBITDA) to interest cover is less or equal to 2x are at
greater risk of default.

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 Chapter 7:
Findings And Conclusion:

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 Finding
❖ The major finding is the growth rate has decreased due to this pragmatic
❖ Almost .3% of rate has gone down
❖ The people are more likely to keep money at their home so, the deposits also decrease.
❖ To encourage the people banks are decreasing the interest rates on loan but also they have
reduces FD charges which discourages the savers.
❖ The advances to private sectors have been reduced so that there can be inflation in money in
near future.
❖ Banks have reduced home loans amt which can attract people to invest in real estate.
❖ Also RBI has reduced the rates so that bank can earn or have more money and the money
flow can be maintained in the economy.
❖ SLR means a liquidity ratio which all the bank are need to make, which has decreased from
19.35 to 18.50% which means banks can invest in worthy projects and make money to grow
the economy.
❖ By reducing repo and reverse repo the RBI has governed banks to get free flow of funds, so
that economy can grow.
❖ Reduced rate always attracts banks to get the funds easily and if bank gets the funds then
people of a country gets the funds.
❖ Other than the main bank other banks are also performing their level best to fight with covid.
❖ If the situation gets worsen from this there may be a possibility that banks need to be
amalgamated or layoff the staff people.
❖ Which may lead to unemployment
❖ Government is trying to make the NPA as lower as possible.
❖ There is a scope for banks to expand in the loans and insurance sector.
❖ As the stock markets shows the downward trend of banks, banks need o perform well to be in
the market.

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 Conclusion

Thus, from this research report we can suggest that covid -19 has made an impact on banking
sector. For some aspects it is beneficial to people by low loan rates, easy credit policies and for
some it has caused damaged also like low FD rates, fear of deposits etc. But overall it has
impacted on the growth of the banking sector.

A research is also done for specific time frame which leads future scope for further research
work.

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 Chapter 8: References

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 References:
1. https://www.adigitalblogger.com/trading/prudent-broking/
2. http://www.igidr.ac.in/pdf/publication/WP-2020-013.pdf
3. https://en.wikipedia.org/wiki/Banking_in_India
4. https://www.investopedia.com/terms/b/bank.asp
5. https://www.jagranjosh.com/general-knowledge/structure-of-banking-sector-in-india-
1448530019-1
6. https://timespro.com/the-impact-of-banking-sector-on-national-
economy/#:~:text=Currently%2C%20the%20banking%20industry%20holds,million%20
people%20in%20the%20country. And http://www.onlinejournal.in/IJIRV3I1/127.pdf
7. https://www.researchgate.net/publication/341909544_COVID-
19_PANDEMIC_AND_LOCKDOWN_IMPACT_ON_INDIA'S_BANKING_SECTOR_
A_SYSTEMIC_LITERATURE_REVIEW

8. https://www.fergusson.edu/upload/document/47654__Mr.GirishJadhav(NMITD).pdf
9. https://www.ibef.org/industry/banking-
india.aspx#:~:text=The%20Indian%20banking%20system%20consists,US%24%201.86
%20trillion%20by%20FY19.
10. https://www.bankbazaar.com/home-loan/repo-rate.html
11. https://www.prsindia.org/theprsblog/central-government%E2%80%99s-response-covid-
19-pandemic-may-23-may-29-2020
12. https://bfsi.economictimes.indiatimes.com/news/banking/covid-19-pain-many-public-
sector-banks-set-to-post-losses-in-the-fourth-quarter/74771588
13. https://www.everestgrp.com/2020-04-how-covid-19-will-impact-it-services-in-the-
banking-and-financial-services-bfs-industry-blog-.html
14. https://timesofindia.indiatimes.com/business/india-business/bad-loans-may-rise-to-20-year-high-due-to-
pandemic-rbi/articleshow/77160894.cms
15. https://indianexpress.com/article/explained/coronavirus-outbreak-disrupting-supply-demand-bank-
loans-6389525/
16. https://www.business-standard.com/article/markets/bank-stocks-still-not-fully-pricing-in-covid-19-
lockdown-impact-analysts-120062900457_1.html

Image references:

• https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.bankexamstoday.co
m%2F2017%2F02%2Fbanking-system-in-india-
explain.html&psig=AOvVaw0tE6_2iEjB2BhinWqT8zCg&ust=1598268913202000&
source=images&cd=vfe&ved=0CAIQjRxqFwoTCMjzg-
OdsesCFQAAAAAdAAAAABAP
• https://www.ibef.org/uploads/industry/Banking-June_2020.jpg
• https://static.toiimg.com/photo/imgsize-67228,msid-77165525/77165525.jpg

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 • https://www.google.com/url?sa=i&url=https%3A%2F%2Ftimesofindia.indiatimes.com%2Fbusiness%2
Findia-business%2Fbanks-bad-loans-may-rise-again-warns-
rbi%2Farticleshow%2F73002075.cms&psig=AOvVaw2vKwERfSyn9TG606DMlK4E&ust=159834955182
4000&source=images&cd=vfe&ved=0CAIQjRxqFwoTCMi79pnKs-sCFQAAAAAdAAAAABAJ
• https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.business-
standard.com%2Farticle%2Fmarkets%2Fno-more-in-the-preferred-list-covid-19-hits-banks-nbfcs-
stocks-hard-
120031901647_1.html&psig=AOvVaw3dr1rFqrgtBW7grO_SwHtK&ust=1598354117271000&source=i
mages&cd=vfe&ved=0CAIQjRxqFwoTCJDc7prbs-sCFQAAAAAdAAAAABAD

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