2020 has been an awful year for everyone in the world and also a bad financial year for every possible sector. As common words go around the rumour mill that the banking sector is doing “ JUST FINE “ is an absolute understatement. No one has been able to escape the claws of COVID-19, the global pandemic. It has affected every sector of the Indian economy. People are overwhelmed and the economy has sustained a huge dent due to the state wide and nationwide lockdown imposed during the past few months since the beginning of the year. This pandemic has been highly disruptive. The worst affected sectors are the service sector and the unorganized sector in our nation.
Since stating the fact, this lockdown has affected the Banking and Finance sector with them adversely. People are withdrawing their savings kept in the banks as their income levels get affected due to the economic slowdown. Purchases have gone down, and people have restricted themselves to necessities. Swiping up credit cards have been decreased exponentially by 40%. Also, getting an online home loan has become a bit more complicated as online lenders are taking more caution while providing a loan, especially towards the new borrowers.
The banks are expecting an increase in the Home loan Interest rate and rates on another type of loan facilities and Credit Card fee by March before the beginning of the financial year in May 2021. The banking and finance sector is facing the worst after-effects of this economic recession followed by the Aviation and Food sector in the list.
In the beginning, the fall in demand for the industry was just 10%, but by the end of mid-April, the downfall rate went up to 29% followed by a further downfall in mid-May where the rate of the downfall was 40%.
Now why people consider the downfall of the banking sector a myth is the fact that everyone knows post lockdown, people will need finance and funds to jumpstart their business or to recover the lost money with no gain during the lockdown period so it’ll be safe to say that the Finance sector will see their rise post lockdown.
But due to this, we shouldn’t ignore the fact that due to this lockdown most of the people got unemployed from the banks or other finance-related organizations. Specialists are saying that from June to September in the year 2021, the industry will see it’s the rise from the deserted area and will get on its feet respectively. But it shouldn’t be forgotten that since during lockdown, with people having a lack of funds, most of the people are scared to carry a burden of a loan when they are having trouble with their source of income.
The government has taken adequate measures ensuring that banking is still a reliable source to the people of our country by giving the borrowers a moratorium for three months and further extending it considering the scenario, which indeed is a great measure but is just keeping the sector above the surface level for breathing while the sector has faced a huge downturn.
Many banks have come up with the facility of providing the loans online with the least amount of hassle, such as the HDFC home loan.
Recently the government has provided significant relief to small businesses and home loan borrowers by stating that if the period of their loan is of 6 months, then no compound interest will be charged.
