Economically, the worldwide COVID-19 outbreak was devastating and impacted all areas of the financial sector. The pandemic created a number of distinct issues, particularly for financial institutions like banks. This is likely to be more severe in developing nations, which often have a less developed infrastructure for their financial markets[1]. In a developing economy, the issue of how the financial sector may enhance its innovative capacities remains unsolved. The banking sector provides crucial support to the Indian economy.

Research Objective
This paper is an effort to measure the direct effects of a covid-19 pandemic on financial institutions due to lockdown. Key indices have dropped sharply, showing that the quick spread of outbreaks like covid-19 has had a major influence on its impact on GDP growth. Concerns regarding the destructive impact of a lockdown on GDP have been voiced by a wide range of organizations, including the International Monetary Fund and World Bank, Central Bank economists, fund managers, and consultancy firms from different nations.

Introduction
A bank is a financial organization whose main purpose is to accept deposits from customers and make loans to enterprises, governments, and other entities in need of financial assistance. When it comes to money, people all across the world have trust in banks. The bank offers a variety of services to its customers, including loans, debit cards, and credit cards. These services are provided as part of the bank's efforts to increase demand and reduce liquidity by requiring public sector banks to lend more money to NBFCs, instituting a partial credit guarantee scheme, and other similar activities.

The bank holds a prominent position in India's economy and helps to create jobs in the country. Public sector banks are in worse condition than before. The Reserve Bank of India has requested that all banking institutions in the country grant a three-month freeze on EMI payments in order to bring liquidity into the system in the light of the new corona virus problem[1]. Their financial records will reflect the difficulties they've experienced and the measures they've taken to overcome them.

Rising nonperforming assets (NPAs), unpaid loans, and credit needs were major contributors. And as a result, banks saw lower profits beginning in 2019. The Reserve Bank of India and the government of India took a number of measures at the federal and state levels to mitigate the effects of COVID-19 on Indian financial institutions. Depending on the severity of the pandemic, the banking industry, particularly in India, may need a significant amount of time to recover, according to some analysts.

Impact Areas of Covid-19
Let's start by providing some context on the Indian banking industry before we get into the core of the problem. When a person deposits money in a bank, no matter how much money is being deposited, the person understands that the money will be safer at the bank than it would be in any place. In addition to this, banks offer a wide variety of services, including options for loans and deposits, fixed deposit programs, debit and credit card services, and many more.

There are now 33 banks operating in India, 12 of which are public sector banks and 21 of which are private. The banking industry is extremely important to the Indian economy and provides many jobs. There has been a steady decline in many key performance measures for India's banks during the past five years[2].

Coronavirus: The Economic Impact of COVID-19 on India - Rabo Research
The Reserve Bank of India (RBI) has made several measures to mitigate the economic effects of the corona virus[1]:

1. Repo Rate- The Repo rate was reduced by 0.75 percentage points by RBI, bringing it down to 4.4. Prior to October of this year, the Repo rate was 5.15 percent.
2. Reverse Repo- The monetary authority also declared that it will reduce the reverse repo rate by 90 basis points, or 0.90%. For an average of Rs 3 lakh crore each day, banks have been depositing funds with the RBI. As of right now, the reverse repo rate was 4%.
3. Loan Moratorium- The RBI Governor also ordered a 3-month ban on term loans due on 1 March 2020. This applies to all commercial banks, including regional, rural, small finance, co-op, all India financial institutions, and NBFCs, including home financing and microfinance.
4. CRR-The cash reserve ratio will be lowered from 4% to 3%, as indicated by the RBI. Starting on March 23, this would add about Rs.137,000crore to the economy.
5. LTRO- The RBI will also do long-term Repo operations, giving banks more cash. The banks must invest this liquidity in commercial papers, investment-grade bonds, and non-convertible debentures.
6. Ease of working Capital financing- Lenders might reevaluate the borrowers working capital cycle and adjust margins to recalculate drawing power. The Reserve Bank of India also made clear that this action would not lead to a devaluation of assets.
7. MSF- The percentage of SLR that can be used as a margin for error has been raised to 3 percent, and it will remain at that level until June30, 2020. In periods of crisis, the banking system would be able to access an extra 137,000 crore of liquidity through the LAF window at a discounted rate, according to the RBI.
8. Fresh Liquidity-According to brief from the Governor, all of the announcements will have an impact equal to about 3.2% of GDP. According to the RBI, the country has received a total of Rs 2.8 lakh crore, or 1.4% of GDP, in liquidity injections since February 2020.

Indian Banking Sectors

India's gross domestic product (GDP) dropped by 24% in the second quarter of 2020, which is a far higher decline than that saw in many other nations that were badly impacted by the Covid-19 outbreak. There is no proof that a V-shaped recovery will occur, despite central government assurances to the contrary. The government's backward and incorrect policy reaction contributed to the severity of the loss. "The central government's additional fiscal stimulus was only about one percent of GDP[2]."

As a result, the government's efforts to help the masses of employees who have lost their jobs and livelihoods have been tragically inadequate, increasing economic inequality and making life difficult for even more people. Because of this, the supply-side shock brought on by the immediate stop in economic activity brought on by the outbreak of virus and the lockdown response to it has been affected by severe demand compression. The Indian government had already been leaning toward monetary tools because to its acceptance of neoliberalism before the Covid-19 crisis hit.

To help mitigate the devastating impact of the coronavirus on the economy, policymakers have resorted to a liquidity injection monetary boost. The risk associated with supplying that credit is to be held by the banks, particularly public sector banks, except for a limited fraction of the credit flow the liquidity injection was intended to create that was partially or wholly guaranteed by the government.

To mitigate the impact of defaults, the central bank has authorized a one-time debt restructuring program and a halt on debt service payments for all borrowers until December 2020. Increased demand for bank loans in the event of a pandemic like corona might lead to a reduction in unsecured forms of financing such as personal loans and credit cards.

Conclusion
Some Indian banks are having trouble repaying their debts because of the impact of the COVID-19 pandemic on their deposits. Bank Nonperforming Assets (NPA) have gone up despite a 3-month grace period granted by the RBI as a result of Corona, which lessened the burden of the regulations controlling poor credit recognition. Bankers are aware that since the government of India implemented the lockdown on 25 March 2020, RBI has made many measures to facilitate banking activities.

In addition to suspending dividend payments for the fiscal year ending 31 March 2019, the RBI has extended the grace period for debtors with impaired credit as a result of covid-19 pandemic. The lockdown has made Banks's condition worse. It will take more time for everything to go back to normal now that the lockdown has been lifted.

On the other hand, public banks may see their non-performing assets increase even more. This would give credibility to the claim that the Indian government lacks the funds necessary to recapitalize these banks, necessitating the sale of shares to private investors in order to raise the necessary capital. In most situations, that would mean the end of a mostly public banking system.

Suggestions
To ensure adequate liquidity in the case of Covid-19, the RBI must now concentrate on the banking system. All small and medium-sized businesses will need access to loans once the lockdown is lifted, and this service should be readily available. All small and medium-sized businesses will need access to loans once the lockdown is lifted, and this service should be readily available. It is important to have well-functioning money and capital markets.

The government of India needs to ease economic stress and worry. It is the responsibility of the government to ensure that the economy is stable enough to avoid coming pandemic, also on the other hand, the Government of India as the central authority of public banks, faced direct losses during the pandemic, on which the government proposed passing of "bank sale bill" (privatization) effecting the public sector banks and relieving the government of its liabilities. In my opinion, public banks must be privatized gradually, and will allow the government to focus more upon other influential factors such as Demand/Supply, Policies, Inflation and leaving the banking sector on Private organizations.

End-Notes:

1. decisions taken by RBI to counter the coronavirus impact on economy - ET BFSI. ETBFSI.com. (2020). Retrieved 17 September 2022, from < https://bfsi.economictimes.indiatimes.com/news/policy/10-decisions-taken-by-rbi-to-counter-coronavirus-impact-on-economy/74844644 >.
2. KENGE, R., & KHAN, Z. (2020). The recession, Its impact And India's Response. Retrieved 26 September 2022, from < https://www.jstor.org/stable/48590645 >
3. Kanitkar, T. (2021). IMPACT OF COVID-19 PANDEMIC ON THE INDIAN ECONOMY: A CRITICAL ANALYSIS. Retrieved 26 September 2022, from < https://www.jstor.org/stable/26965501 >
4. COVID-19: Impact on the banking sector. (2020). Retrieved 26 September 2022, from < https://home.kpmg/xx/en/home/insights/2020/07/covid-19-impact-on-banking-m-and-a-2020.html >
5. KOUJIANOU, P., & REED, T. (2020). The Effects of the Coronavirus Pandemic in Emerging Market and Developing Economies: An Optimistic Preliminary Account. Retrieved 26 September 2022, from < https://www.jstor.org/stable/26996640 >

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