Last Updated : Sep 24, 2020 03:07 PM IST | Source: Moneycontrol.com

COVID-19 impact | Indian banking system will be one of the slowest to recover: S&P

Major banking systems, such as the US, UK, France, Germany, Spain, Italy, Japan, Australia, Brazil, Indonesia, and Russia, are also unlikely to recover until 2023

The Indian banking system will be one of the slowest to return to 2019 levels, and full recovery might stretch beyond 2023, according to a report by S&P Global Ratings.

"For India, Mexico, and South Africa, a recovery to pre-COVID-19 levels may not arrive until after 2023," S&P said in its report on global banking.

Major banking systems, such as the US, UK, France, Germany, Spain, Italy, Japan, Australia, Brazil, Indonesia, and Russia, are also unlikely to recover until 2023.

In its report, S&P said it doesn't expect the banking systems in many countries to see a full recovery before 2022.

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more
Show

related news

"We don't expect the world's largest banking sectors, including more than half of G20's, to recover to pre-COVID-19 levels until 2023, or beyond."

The report said the COVID-19 pandemic and plunge in oil prices has hurt banks across the globe, the report said.

"Even for less-affected banking jurisdictions, recovery to pre-COVID-19 levels will unlikely come before end-2022. These jurisdictions include China, Canada, Singapore, Hong Kong, South Korea and Saudi Arabia," the report added.

According to S&P, recovery for banks in emerging markets, including India, will be more painful. Banks in such countries might even see sharp credit losses in 2020.

"The path to recovery will be more painful for emerging markets such as India. The banks' recovery to long-term averages for key asset quality and profitability ratios will take years," the report said.

In an earlier report, S&P had already forecast credit losses of around $2.1 trillion for 2020 and 2021 for the global banking sector, due to the economic fallout of the pandemic.
First Published on Sep 24, 2020 03:07 pm