1.Why should bank give compensation to the other businesses for such pervasive effect of pandemic? Bank itself is a business. In some instances, return of bank’s capital seems quite lower than the return of businesses’, which are proposed as beneficiary of compensation. Further, How is and who is giving compensation to BFIs?
-Each business should be well prepared thereof to take different form of risk during the course. If entrepreneurs perceive risk in their business and benefits to other sectors then they may switch to other business. It’s a natural phenomenon.
-Another blunder will be to provide extra loan facility or relaxation to the ceiling of loan to a business though they do not fulfill the normal lending canons. One day; sooner or later it will create the problem of default.
2. It would be disaster to relax any provision regarding loan classification and financial reporting by the BFIs. Government should ensure the proper implementation of usual regulatory frames to access the impact of COVID-19 in our banking and the economy. However, only short period consideration could be granted on certain regulatory norms and benchmark to penalize the institutions.
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