The coronavirus or COVID-19 has already claimed more than 10,000 lives around the world. The disease originated from China, but it has spread across the world, especially in Europe. India has also recorded a rise in coronavirus cases over the past few days, with the total number of cases crossing 200 as of 21st March 2020.
The disease has proved to be a major disruption for a range of industries and business activities alike. In India, the pandemic has proved to be particularly harmful to the growth prospects of industries like banking and international trade
This blog looks at the ways in which the Indian banking and importation sectors have been impacted by the pandemic
Impact on Indian Banks
The operations and strategic initiatives of Indian banks have been severely disrupted by the coronavirus
For example, Axis Bank and Deutsche Bank have already announced that they are invoking business continuity plans that are meant for emergencies
- Around 67% of Axis Bank employees have already been asked to work from home
- Deutsche Bank has also asked certain employees to not come to the office on a regular basis
- The corporate finance activities of Indian banks have also faced a major slowdown during the month of March 2020
- Banks are also facing fresh challenges in the form of debt collection and defaults taking place in a challenging environment
- Banks are also in discussions with the Reserve Bank of India (RBI) regarding the restructuring of their loan products
- Indian lenders want to restructure their loans in order to provide relief to the masses during this challenging phase
- Banks are also looking to introduce new initiatives like easier financing for small and medium-sized enterprises
- Such an initiative could help them in countering the slow credit growth that is being recorded because of the coronavirus
- Major banks like Citibank have also announced that they are testing new contingency plans
- Japanese lender MUFG has also issued travel advisories, banned large-scale gatherings, and minimized instances of physical meetings
Impact on Importation and Related Activities
In comparison to the banking sector, the importation industry has fared slightly better against the pandemic. According to experts, India’s major imports come in the form of fuel and jewelry. These two sectors are relatively safe until now because of strong fundamentals and high demand. However, the importation sector could face major challenges in the coming weeks, especially if the pandemic continues to spread far and wide
Another issue is that various importers are engaged in business with China, and they are already facing delays and postponements. The major types of imports that are being impacted by the crisis include electrical machinery, organic chemicals, mechanical appliances, optical & surgical instruments, and plastics
The pharmaceutical imports from China are also being impacted significantly by the coronavirus. According to estimates, almost 85% of the total pharma imports coming into India are sourced from China. Various Chinese factories have been shut due to the pandemic, and this is piling on the pressure on Indian importers
In particular, imports from the provinces of Hubei and Wuhan are being slowed down by the pandemic.
During these challenging times, importers can often look to avail help from external sources. Institutions such as Euro Exim Bank offer customized support in the form of financial instruments and bespoke trade advisory services. Euro Exim Bank offers useful financial instruments such as Bank Guarantees and Letters of Credit (LCs). Further information about Euro Exim Bank and its key product offerings is available here.