At this moment we have successfully crossed 1.5 million corona cases in India. Every passing day new cases are arising, and deaths are increasing and each day we are touching new peaks. We have already lost more than 35,000 Indians to this pandemic. Millions of job losses, studies, and careers of around 30 crores Indian students are uncertain. The migrant workers who moved to their villages from big cities carried the virus as well. Now the cases in the rural villages started increasing and will continue to do so because of the poor medical, housing, and infrastructure facilities in rural India. The unacceptable truth is that the actual cases and death bound to be much higher than the Government’s data. The number of tests conducted is much lower if you consider the country as a whole and unfortunately, we don’t have the required infrastructure facilities to do enough testing. 

Life Vs livelihood
The initial purpose of the lockdown was to control the pandemic but that did not happen even after the series of Lockdowns. This is not only happening in India, the condition is the same around the world. On March 23, the lockdown was a decision of tradeoff between Life and Livelihood of the Indians. The Indian government decided to save a life over the livelihood of Indians. But livelihood got a huge hit. Down the line, today now because of the increasing number of cases, both, life and livelihood are uncertain because of the continuous lockdown and infections. The only hope for us is that the death rate in India is lower than the other countries, Because of the lower death rate, the hospitals are not overcrowded now. But in case, if they increase, then the fear of death will create a panic and chaos among the common man, which will again disrupt both life and livelihood.

The Great Pandemic:
After three months of the lockdown being imposed, it is very evident that the economy got disturbed and it is going to be very difficult to come back to the pre-corona state. Almost all the recent estimates state that in 2020, Indian GDP will shrink more than 5% and getting a positive growth even in 2021 is also going to be challenging. It is not going to be easy for Businesses to resume their operations even after the lockdown. They will be facing cash flow issues, interest burden will hit badly to those who have higher operating leverage. Unfortunately, those sectors are the labor-intensive manufacturing and automobile sectors. This will further lead to job losses and business closer. Moreover, the lockdown continues with few relaxations and it seems like there is no dead end in the near future.

Banks are not lending yet raising Funds:
Banks said they will raise capital by tapping the value markets or through debt instruments. HDFC Bank said on 20 June that it has gotten barricade endorsement to raise to ₹50,000 crores in the following a year by giving debt protections, while State Bank of India (SBI) said on 16 June that it intends to raise ₹20,000 crores of value capital in FY21.

There is a flood in the number of banks and other financial institutions hitting the market for capital, yet institutional speculators are looking for extra defends, There is a great deal of vulnerability in the market and financial specialists are happy to hold up before submitting reserves. This will, in any case, not be an issue for enormous manages an account with better asset quality.

The government and RBI tried to increase the credits by continuously reducing the repo rates. But banks are not ready to provide any additional loans at this moment. It is not only because of the crisis, it is also because of their NPA profile. Already in the last 2-3 years, the banks became more cautious in lending. They learned a lesson from the bad boys of India like Vijay Mallya, Nirav Modi, etc. It is also true that they don’t want to lend in this uncertain period.

Already Indian banks allotted around 13,500 cr only for COVID provisions based on the moratorium amount of each bank. The amount is expected to increase further because of continuous lockdowns. Since, the banks are not willing to lend money, they are depositing huge amounts of money in the safe custody of the reserve bank of India.

If the banks are not ready to lend money, then why to raise capital?

There are two main reasons to be considered:
As mentioned above, the NPA might rise drastically, to handle NPA pressure all the banks need additional capital. Another potential reason is that the Economy may recover within 3-6 months once the economy started recovering there will be a need for fresh capital for the businesses. After every crisis, the economy will get a boost for the next 12-24 months to clearing the supply-demand backlogs.

When this crisis and Lockdown is going to end?

The only hope to come out of this uncertainty and economic crisis is the vaccine for the COVID -19. Until then the uncertainty, Economic Crisis, Chaos; panic will be there with us. There are around 163 vaccines under different stages of testing. There are three vaccines in phase 3 of testing as on 20th July 2020. In the past two months, we lost trust in other human beings that we had for years. We may not have the confidence to touch or to move close to other human beings. Even after getting the vaccine for COVID, it is going to be difficult to gain trust back. But it is also true that India was a dominant player in the Pharma Industry for years. India has better Production facilities than many of the developed nations in the world. So now the key is to get the vaccine, if that happens, we will be able to deliver the vaccine to the entire world as Microsoft Co-founder Bill Gates rightly said.