It came it spread it conquered – part 3 – Finance and Fintech

It came it spread it conquered – part 3 – Finance and Fintech

It came. It spread. It conquered.

Ever since Wuhan reported its patient zero for the novel coronavirus disease 2019 (COVID-19) in November, 2019, the world has not been able to heave a sigh of relief. The virus has penetrated and continues to penetrate into receptacles of almost every country you can name – the burden being distributed asymmetrically. The streets have been deserted, flights and trains have been suspended, companies have come to a standstill, and the common man has been trapped inside the four walls of his own house – for a period of time that even the highest authorities are unable to state. Quarantine and social distancing have taken the role of those uninvited guests in our day-to-day life, who barge inside without a knock. Hygiene and sanitisation practices have taken birth as a new religion, while people all around are going frenzy over immunity boosting techniques. As healthcare and pharma giants worldwide struggle to find a potential cure, SMEs and start-ups are also joining forces and working round-the-clock amid this invisible battle – or rather microscopically-visible battle. Albeit, keeping the possibility of mass commercial availability of a viable vaccine at bay, let us break down and scrutinise the consequences of this pandemic on businesses – sector by sector.

Finance and Fintech

Immediately after the World Health Organisation declared COVID-19 a global pandemic on March 11, 2020, a sudden pandemonium broke loose all around. Investors started pulling out their money, the stock markets of the world crashed, and central banks made off-cycle rate cuts and injected liquidity to keep the economy moving. On March 12, 2020, theS&P BSE Sensex fell by 2919.26 points (-8.18 per cent), the worst bump of the week in the history whileNSE Nifty-50 broke down by 868.25 points (-8.30 per cent); Sensex ended to a 33-month low of 32778.14. On March 23, 2020, Sensex lost additional 3,934.72 points (-13.15 per cent) and Nifty plunged 1,135 points (-12.98 per cent) at 7610.25, as coronavirus-led lockdowns across the world triggered fears of a recession. These huge dips in both the indices hindered their continuing progress made over the past years and disrupted markets ferociously. These were the lowest levels since 2016 and the biggest weekly loss witnessed since October 2008, no less than a nightmare for investors and capitalists alike. Here are trends for Sensex over the past one year and past 20 years respectively fetched fromMoneyControl.

Similar trends can be observed for Nifty.

Banks have been the good Samaritans during COVID-19 lockdown; they have dispensed all critical services for the larger betterment of the society. Despite reduced staff and greater demands, all nationalised and private banks remained operational during entire Lockdowns 1.0, 2.0, 3.0, and 4.0. The workers braved the situation every day and served the society by risking their lives. The humanitarian efforts of banks will be remembered, time and again. The narrative will change in the coming quarters as banks will get questioned on their de-risking measures and resultant asset quality by one and all – statutory auditors, regulators, investors, respective boards, and the media. The asset classification measures announced by RBI, however, will partly alleviate the pain. As per the revised norms, the regulator has extended the three-month moratorium to all standard borrowers as on March 1, 2020. The moratorium on repayment of term loans by borrowers means that they would not have to pay the loan EMI instalments during the moratorium period. Availing such a moratorium would also not lead to a downgrading of the borrower’s credit rating, or affect the risk classification of the loan. Further, availing the moratorium will not entail any change in the existing terms and conditions of the loan. Deferred instalments under the moratorium are to include the following payments falling due from March 1, 2020 to May 31, 2020:

  • Principal and/or interest components on loans
  • Bullet repayments
  • Equated Monthly Installments (EMIs)
  • Credit card dues

Moreover, the income tax return (ITR) filing deadline for FY 2019-20 also has been extended to November 30, 2020. The government has also reduced the TDS rates applicable for non-salaried payments. As per the announcement, to provide more funds to taxpayers, rates of TDS for non-salaried specified payments made to residents and rates of TCS for specified receipts shall be reduced by 25 per cent.Add alt

Since majority of the population is working from home, dealings in cash have dwindled significantly. People are migrating towards e-payment platforms more than ever, for the reason being they don’t wish to venture out for sales and purchase of goods and services by preferring to order everything at their doorsteps with the ease of their fingertips. Another logical reason turns out to be ‘contactless payment’: in lieu of currency notes and coins ushering propagation of the virus. Banking sector too, is propounding that the customers leverage internet banking and mobile banking to its acme, avoiding physical visits to banks. Consequently, digital payment platforms like PayTM, Google Pay, PhonePe, and Mobikwik saw a whopping increase of 42 per cent Indians in the last few weeks. Buying essentials and mobile recharges topped the charts for use cases of digital payments, according to a survey of 42,000 respondents done by Local Circles.

E-commerce platforms, especially the ones delivering groceries like BigBasket, Grofers, Scootsy, Flipkart, Amazon, StarQuik, DMart, and Dunzo, also espied a massive spike in orders with some reporting five times demand for essential goods in the last two months resulting in continuous unavailability of delivery slots and frequent app crashes. Food delivery platforms such as Zomato, Swiggy, Domino’s, Box8 among many surprisingly came forward to start delivery services for groceries and essentials including bread, eggs, flour, and rice; rendering themselves additional survival edge brownie points amidst the falling market. Moreover, thousands of local retail shops, vegetable and fruit sellers, and Kiraana owners introduced home delivery of goods with e-payment facilities. This digitisation has laid down a promising foundation towards future – reshaping the way we would be trading in the post-pandemic timeframe.

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