The economic disturbances persuaded by the Covid 19 pandemic induced lockdown which have led to widespread retrenchment, redundancy, liquidity constraints, and non-repayment of debt commitment unfavorably impacting the business across major segments. These disturbances reiterate the need for following financial strategies to maintain long-run financial stability. The ones who followed these strategies and remained reaffirmed on the soundness and stability of the financial environment were able to weather the pandemic induced disturbances.
The pandemic caused income disruptions that adversely affected the debt servicing volume of a huge segment of individual borrowers consequently leading them to go for the loan moratorium and credit cards announced by RBI to solidify the consequences. Around fifty percent of the individual borrowers had opted for the loan moratorium on April 30, 2020, according to the Financial Stability Report emancipated by RBI in July 2020.
The only way to ensure the adequacy of a sufficient amount of funds during times of contingent emergencies that also factors in EMI’s and other debt reimbursements commitment over the period of the next six months. Those who had the sufficiency of adequate liquidity funds during the pandemic were stable enough and better equipped to reimburse their credit card bills and EMI’s in lieu of the income disturbances. Inevitable expenses such as insurance premiums, home rent, monthly contributions, utility bills, and crucial financial payments over the next 6 months are included in the emergency funds.
As financial troubles come all of a sudden one should park their emergency funds into the instruments that permit one to make instant withdrawals. Those who are well versed with Internet and banking facilities should park their emergency funds in propagative fixed deposits offered by banks. However, one should not be utilizing their emergency funds for short term financial needs and should recharge equity investments during future market corrections. Adequate financial cover should be maintained for self and family.