Dinesh Kumar Khara, MD-global banking and subsidiaries of State Bank of India (SBI) said, “When it comes to SBI and also the recent policy announcement by Reserve Bank of India (RBI), it has certainly brought in some kind of fairness in the financial market because what was happening is that all the papers being traded with such wide margins, yields are widening quite a lot. That was something which was a matter of concern which is nothing but a reflection of some kind of a fear in the mind of the investors. That gets adjusted by virtue of this targeted long-term repo, which has been announced by RBI and now they are offering it to all the banks.

“It is a fairly wide market and if at all somebody is asking for exceptional premium, somebody else who is perceiving risk in a different light will be in a position to price it better. So it is a part of the market play, it is not that banks have decided on their own to go for the kind of risk premium,” he added.

When asked if RBI had done enough to ease the financial stress caused by the COVID-19 disruptions by relaxing payment pressures as well as improving access to working capital, he replied, “Whatever steps have been taken, to a greater extent, they have mitigated that kind of stress which we would have seen on account of the 21-days lockdown which has been announced. However, I would say that the only thing could be the special mention accounts – SMA-I and SMA-II, which normally has a tendency of seeing the recovery towards the latter half of the month only of the quarter-ending month. So there we might face some kind of a situation but that also – through follow-up mechanism – is being resorted, perhaps we might get some results. I would say that as far as the pain was concerned to the extent of about 90 percent, has been addressed.”

When asked if every customer would get the 3-months moratorium unless they specifically opt out is the arrangement or the other way round, he replied, “Everybody is entitled for the moratorium unless they opt out.”

In terms of how margins will pan out for the next quarter, Khara said, “Margins we haven’t looked at yet at this point of time because the issue involved is - the problem at hand for the economy and for the world is much larger. We will evaluate that situation at later date.”

On the asset quality, he said, “We are in the process of evaluating the impact. It would be too early for me to say anything.”

On steps taken for SMEs, he said, “Even before the RBI announcement came in, as far as SBI was concerned, we had gone ahead and announced emergency package for SMEs, which is 10 percent of the working capital for all the accounts which are performing. It is natural on the part of SMEs that there would be some more demand. Hopefully, we should be in a position to address their concerns. Apart from that the margin related relaxations, which have been granted by RBI will also go, it will also help SMEs to get over their current problems.”

When asked about loan growth, he stated, “It could be that after the lockdown is taken off, there would be pent-up demand and to meet up that demand, the corporates might go for the shoring up their working capital too. Apart from that, there is bound to be some kind of reconstruction effort post COVID-19. I am sure that will also bring in opportunities for the credit growth.”