The COVID-19 pandemic has driven a step-change across the European payments industry. We’ve seen an acceleration of cashless payments across markets where cash has historically been dominant. And an exponential increase in e-commerce activity as consumers were forced to stay at home during national lockdowns
Banks are suffering from a problem: cash. Not long ago, many struggled to maintain liquidity, then COVID-19 arrived. Consumers and businesses have flooded them with deposits, as governments have doled out aid, uncertainty has made safe havens attractive, and continual lockdowns have restricted activity. But this is likely to change soon.
COVID-19 has strained every part of India’s society, including its financial sector. Small businesses are suffering, but banks (many owned by the government) are hesitant to lend. For India to get back on the road to recovery, institutional finance is crucial. Policy steps in the right direction are being made, but more needs to be done.
India’s banking system has been plagued by shadow banking since the 1990s, when non-banking financial companies sprouted up and grew, creating a financial crisis that is as unique as the country itself. NBFCs perform the same functions as traditional banks but under the radar of regulation, creating the potential for disruption. Recent failures of NBFCs that have spread to the broader economy have prompted regulators to adopt a stricter stance.
On April 1, 2017, India’s largest bank, the State Bank of India (SBI), expanded its size even further after completing its long-awaited merger with Bharatiya Mahila Bank and five of its commercial banking subsidiaries: State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore.