Banks will look to partner with fintech firms to create the right ecosystem that enables digitized lending
Before the pandemic, the Indian financial sector was already in a vulnerable state. India had one of the highest percentages of gross non-performing assets (GNPAs) among major economies. Furthermore, the liquidity crisis triggered by the Infrastructure Leasing and Financial Services default continued to impact the non-banking financial company sector, while a high level of corporate credit defaults resulted in a contraction of available credit. One bright spot, however, was the retail sector, with private banks, in particular, showing strong growth in segments like personal loans.
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Prior to covid-19, the low- and lower-middle income classes were the key consumption drivers of the economy, accounting for 66% of India’s total consumption.
Unfortunately, the same households are the population most meaningfully impacted by the pandemic.
On the other hand, high-income and upper-middle-income households account for 64% of the savings, where the impact of the pandemic is likely to be more mixed. Even if the economy sees rapid stabilization with aggressive containment and a large fiscal stimulus, expenditure is expected to decline by 9-11%.
Source: livemint
