first_imgWe are passing through very difficult times. Stock Markets are falling precipitously every day. Every Asset Class is down. Property Market was down even otherwise. However, now even Gold, Silver, Oil, Commodities, etc. have also fallen significantly. In fact, normally when one asset class is down, another asset class picks up and the investors have some or other option for investments. With the experience of PMC Bank and Yes Bank, people would be very cautious and wary of keeping their idle funds with Banks other than PSBs and rate of interest on deposits offerred by PSBs don’t offer much.Now, with the ongoing scare of COVID 19, most businesses have stopped working or have been asked to stop their operations so as to avoid the contagion. This is going to effect the business firms very badly as business was already down and people were already incurring heavy losses due to the slump. The effect of this is going to be very strongly felt by the Banks as there could be defaults in repayments and consequential rise in the overall NPA.Considering this, the RBI has come out with a timely circular dated 16th March, 2020 wherein it has advised Banks to review their critical processes in terms of identifying any infected employee/customer, sensitizing staff and customers about preventive measures, advising customers to go digital, to assess the risks emanating to their organisation due to further spread of the decease and forming Quick Response Team for co-ordinating the efforts in this regard.So far, the effect of the virus on the Banks is not much talked about. However, there is real danger to the financial system and more particularly to the Banks due to failure of borrowers, mass leave by staff, customer complaints due to timely services not received, etc. The RBI has brought these risk factors to the fore and rightly so. Its’ time the managements take appropriate cognisance of the risk emanating from the contagion.last_img read more