As bad loans have increased due to COVID-19 crisis, the financial sector needs recapitalisation, Kotak Mahindra Bank MD Uday Kotak said.
He further said these costs would be borne by the financial sector and the capital position of the banking sector is likely to be impacted by about 40 percent, even if 4-5 percent of loans turn bad.
The layoffs have become a common norm and there has been a reduction in the remuneration as well, widening the demand-supply gap in the market.
Thus, it is important to recapitalise the financial sector. The bank also raised Rs 7,400 crore through Qualified Institutional Placement (QIP) in May. This amount would help the bank meet the contingencies or financing business opportunities, he said.
Nevertheless, the consistent slowdown across geographies has facilitated a significant monetary expansion by central banks worldwide- to help revive the market.
However, he said, I believe the government and industry would not get affected due to current fiscal year’s slowdown and must plan towards reinstating the growth objectives.
Kotak while speaking about the performance of his bank said, the bank has stood strong with its clients amidst the pandemic and saving deposits crossed over Rs 1 lakh crore, growing by 21 percent on a year-on-year (YoY) basis. There has been about a 7 percent rise on a YoY basis, which is good considering the market which is declining since March 2020.