main concern for Banks now due the Covid-19 pandemic. What are the major issues now and...

main concern for Banks now due the Covid-19 pandemic. What are the major issues now and in the future in respect of lending decision and management?

Expert Solution

Answer-

The COVID-19 has impacted the banks adversely.

The major concerns by the banks are

1) Default risk faced by the banks - The loans may not be repaid and the bad loans and Non performing assets are likely to increase.

2) Decrease in loans that are received from the borrowers due to moratorium issued by the central banks due to adverse economic conditions.

3) Financial risk- The uncertainity faced by the pandemic COVID-19 has created a situation that will increase the financial risk on lending.

The lending by banks will have to be scrutinized by the bank management and lending has to be done after proper due diligence. The COVID-19 has impacted most of the businesses and th lending has to be doneon case by case basis so that there is no default as the uncertainity persists due to timing of economic recovery.

The bank management will face dilemma to lend due to the risk that can push the companies and businesses into bankruptcy. The better scenario will be to carefully watch the situation and minimize the investments in risky sectors and doing proper due diligence before lending. The future lending should be on the basis of economic recovery.

jeff jeffy answered 2 years ago

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