To know how the banking sector was coping up with this absolute mayhem and what would be the next steps required, CNBC_TV18 spoke with Aditya Puri of HDFC Bank.

Firstly, we must understand that the virus has to be controlled and any measure we take whether the market reacts positively or not is important. "I am very happy that we have done this lockdown, we should see if we can control it and cases start falling – that will be the best thing that can happen to everybody this is the first part.”

Second part is what is going to happen to the financial markets and the economy. "If you see crisis wise this is hell of a crisis. We need to have financial backing, the difficulty that we will be going through. We should have a non-schedule rate cut. This is both to keep the yields in check as well as give a clear message to the market that we are willing to go to whatever stake necessary. I don’t know why it is taking so long because there is no alternative. We have to give forbearance for a cash flow problem that the virus will create, it is not that the companies are going bad, they could be cash flow mismatches and the more liquidity that we can give them we can make sure that life after virus is better,” he said.

While giving picture about his bank he said, “If the companies survive, the country will survive and the banks will also survive. We have been working on this. We are sitting on liquidity of USD 5 billion. Our total portfolio is rated AAA at internal risk rating of 4.3. We have lend most of our wholesale to 80 percent to AAA companies. On the PL side also we have lent to the same fellows for salary and before you start laying off – is a very difficult decision for a company to take and I don’t think that would come but there will probably be salary cuts before that so 75-80 percent of our personal loans and our credit cards are to the same salaried employees there."

"As far as SME portfolio is concerned compared to the others, 80 percent of our portfolio has got additional collateral and we have a self-funding ratio in our SME of 85 percent. I am more concerned with the health aspect than being concerned about the bank.”

He further added, “Our bottom of the pyramid on the businesses are not highly leveraged, so when we went to the ground for the shopkeepers etc. they are not highly leveraged. A large part of SMEs also are not highly leveraged.”

Talking about rural India he said, “Rural India, actually, surprisingly is functioning in its own world. Only thing we have to do is stop people going back there and spreading. They have the money, our demand is coming from there.”

With regards to earnings, he said, “You cannot look absolutely at a flat quarter, and you cannot look at a drop in profit, you would be surprised with the numbers. I will also create a corona reserve and come out still okay."

On the work from home structure he said, “Approximately 33 percent of our people are working from home now, I see no reason why they shouldn’t continue after corona which gives us a further drop in our costs. So our cost to revenue is going down. We have substantially increased our distribution, we have the technology, and we have USD 5 billion of liquidity and it is still coming in.”

First Published:Mar 23, 2020 2:14 PM IST