Markets may be ignoring banks' NPA risk from second coronavirus wave

New measures allow banks to defer full recognition of NPAs, encourage lending to areas having high probability of defaults

The RBI’s new measures to tackle the Second Wave seem to have lifted sentiments in the financial sector, temporarily at least. The key points of the Governor’s statement can be summarised as follows.

Global economic activity seems to be picking up but the Second Wave has put the brakes on fast domestic recovery. The next few months are likely to be bad and the central bank will do what it can, to support life and maintenance of livelihood through a difficult period.

Banks can lend Rs 50,000 crore more to health-care related activities, and these will be treated as priority