There has been a massive decline in bank stocks following negative news surrounding the sector during the extended weekend. The lockdown extension in large red zones that account for about 25-30 percent of the economy is an indication that the economy is still not functioning near normal.

The slowdown in the relaxations, slower-than-expected opening up of the economy is the big reason perhaps why there is a second wave of negativity on the banks. To discuss this further, Saswata Guha, Director - Financial Institutions of Fitch Ratings-India is in conversation with CNBC-TV18.

He said, “What I think is probably driving this kind of market sentiment and again we ourselves are quite negative in terms of the asset quality outlook of banks is because is the fact that longer this so called lockdown continues, our fear is that in several sectors what is seemingly look cyclical now will start looking very structural 3 or 6 months hence and I think that is clearly where the concern lies. So it is hard for me to say at this stage whether the 9 percent will become 18 percent, but could the 9 percent become say maybe 12 percent by the time this year ends subject to some of these variables – yes that could very well be possible.”

Watch the video for more.