The ‘V-shaped’ rebound comes on the back of steep fall seen in the months of March and April during the nationwide lockdown when the popular instant payment service had lost nearly 25% of transaction volumes.
In May 2017, the central bank had initiated PCA against the lender due to high non-performing assets and negative return on assets.
The central bank said it had advised the National Payment Corporation of India (NPCI), which manages the UPI system, to not permit WhatsApp to launch full-scale payment services till the time it fully complied with the rules.
The slowdown in disbursement of new credit in this period has been attributed by bankers to challenges in conducting origination activities, lack of clarity in moratorium extension and risk averseness amid tell-tale signs of stress across sectors.
India began a nationwide lockdown on March 25. Curbs began to be eased in May, sparking a revival due to pent-up demand. But states imposed localised shutdowns this month after outbreaks of the disease. India has the third-largest number of Covid-19 infections.
"There may be slight delay in the mutual due diligence and preparation of documents for regulatory requirements due to Covid situation and travel restrictions. Hence, both the parties mutually agreed to extend the exclusivity period till 15th September 2020," the bank said on Thursday evening.
The lender is creating a structure for what will be an in-house bad bank that will house all its bad loans and also buy bad assets from other lenders.
Acharya, who went back to New York as a professor of economics after quitting his job at the RBI six months before the end of his three-year term, said bankruptcy should not be seen as a punishment, but as a way to restructure debts and pitched for the courts to reopen in the next two to three months.
To fill his growth gap, banks are now focusing on secured segments like mortgage loans, agriculture and top rated medium and small enterprises.
The ex-central banker was referring to Japan’s experience in the 1990s when a weak banking and financial sector crippled activity and contributed to a lost decade of sub-par economic growth. The RBI sees the country’s bad-loan ratio swelling to the highest level in more than two decades — to 12.5% by March 2021, the highest level since 1999.
Yes Bank was privately owned, before it was quasi-nationalized by making it SBI’s problem. But next year, there will be several small state-owned banks in a similar situation where capital buffers are depleted. This can’t happen yet because of RBI's Covid moratorium on repayments. When the freeze ends next month, loans will start turning overdue.
Presentations by the PSB heads are likely to cover the key issues being faced by the sector in the backdrop of the slowing economy besides status on credit disbursement.