Owing to the Pandemic and the subsequent economic lockdown which has led to repression in the economic activities thereby initiating a phase of recessionary measures, the banks have suffered acute credit shortage. The banking institutions in the country have suffered long-term impacts of financial resource depletion leading to the permanent closure of some banking and non-banking financial institutions. Moreover, the Non-Banking Financial Companies (NBFCs) have been the most impacted due to the economic closure of business activities since most of the lending operations in these institutions have come to a complete standstill.
It has been noticed that the NBFCs have requested the Union Government Banking Authorities in the country to transfer credit liquidity and leverage resources so that better banking operations can be performed. The Union Budget for 2021-22 will be presented on 1st February 2021. The Chiefs of the Non-Banking Financial Companies have requested the Union Government of India to provide liquidity and credit resources so that they can survive through this difficult quarter where the overall Gross Domestic Product (GDP) in the country subsided to 23.9%.
The Pandemic and the subsequent lockdown situation has been detrimental to the growth of the Indian economy. This Reserve Bank of India (RBI) being the primary banking institution in the country has introduced certain measures like the Partial Credit Guarantee Scheme (PCGS), Targeted Long-Term Repo Operations (TLTRO), and Special Liquidity Scheme (SLS). The authorities financing the budget have said that “This is the first budget after the Pandemic situation, which had a terrible impact on the working culture in India leading to depletion of financial resources and caused the death of more than 1.5 lac human beings. The Government of India and the RBI together have decided to take conscious steps and measures to initiate the process of economic recovery”.