Coronavirus impact: IBA to seek relief package for financial institutions

The Indian Banks’ Association (IBA) is preparing a set of recommendations to be sent to the Reserve Bank of India (RBI) and the government, seeking a relief package for financial institutions and businesses being affected by the spread of coronavirus across the country.

Separately, the IBA will issue advisories for staff and customers of banks in a bid to minimise the impact of the virus on the financial sector. These include mandating cashiers at the branch level to wear gloves while counting cash and requesting customers to go for digital transactions. 

“The IBA is closely working on a plan to meet the challenges related to coronavirus. We are going to issue advisories to bank employees and the general public and assure them that there is no need to panic,” IBA Chief Executive Officer Sunil Mehta told Business Standard.

Mehta said the IBA is also conducting an impact-analysis of coronavirus on the financial sector and businesses. The association had held an emergency meeting with the chief executives of banks on Monday and discussed their grievances on this matter.

It is learnt that banks are keen on making representation for relief regarding non-performing asset classification in the small and medium enterprises sector. “The government and the RBI is taking all possible measures to contain the coronavirus. But there will undoubtedly be some impact on the economy. The transportation, hospitality and business of aggregators will see the impact for some time,” Syndicate Bank Managing Director and Chief Executive Officer Mrutyunjay Mahapatra said. He added banks were closely examining whether or not there be a delay in the working capital cycle or some restructuring of some loan accounts.

The first visible impact of COVID 19 on bank employees came earlier this month when a currency chest of SBI in Kerala had to be shut after it came to light that a coronavirus-infected person made a visit to open a non-resident Indian account and deposit cash. The employees of the currency chest are under quarantine till March 31 after the SBI wrote to the RBI on March 11 asking for the branch to be temporarily shut. 

Now, the IBA has told banks to prepare a “business continuity plan” so that financial services are not impacted “even during the worst times”, Mehta added.

One of the possibilities that banks would explore is to split duties and responsibilities, apart from working in different shifts and geographies. For instance, some employees may be asked to work starting from 8 am, and others starting from 10 am.  

The IBA will also suggest precautionary measures for bank staff. For instance, cashiers at the branch level would be asked to wear gloves while counting cash. The employees will be told to wash hands with soap regularly as they deal with the public throughout the day.  

While one advisory of the IBA will be on the contingency plans for banks, the other one will be for the general public. The IBA will encourage citizens to go for digital transactions so that there is less crowding at the branches.

The IBA has asked banks to collect data on the impact of coronavirus on various sectors of the economy. 

The IBA is set to discuss these issues in its management committee scheduled to be held on March 20 during which officials will be encouraged to participate through videoconferencing.