The recent announcement by the Reserve Bank of India extending the moratorium on term loans by another three months is merely kicking the can down the road, Axis Bank CEO Amitabh Chaudhry said in an interview to CNBC-TV18.

He said the number of borrowers who can't repay bank loans is only going to increase, he said, adding that the RBI should allow one-time restructuring of loan accounts. He sees both individuals as well as corporate clients struggling to pay back loans.

Many other bankers too have been calling for a one-time restructuring by the RBI.

Chaudhry expects strong banks to get bigger at the cost of smaller players in the system, and sees tough times for the banking industry over the next 12-18 months.

He said many non-banking finance companies were facing a liquidity crisis.

Chaudhry expects asset quality of most banks to deteriorate, and the cost of credit rising.

He said slippage for Axis Bank too would rise, but that the bank was well-cushioned in terms of capital levels. He said the bank will continue to look at ways and means of buffering the capital level of the bank.

Chaudhry said the bank has been conservative in making provisions for bad loans, meaning, the bank is setting aside more money for bad loans than required under RBI guidelines

First Published:Jun 1, 2020 9:15 AM IST