The CII-IBA Financial Conditions Index for Q1 FY 2020-21 recorded a steep drop to below 50 mark for the first time in the past few quarters ostensibly because of the expectation of deterioration in the overall financial conditions in the economy resulting from worsening funding liquidity, external financial linkages and economic activity index. However, respondents recorded their optimism with respect to the availability of funds at a lower cost. With a series of lockdowns happening across the world bringing economic activities to a virtual halt, organizations in the global arena are uncertain about the whereabouts of their cash flows and business prospects. India is not an exception. A total of 22 entities participated in the survey – 9 public sector banks, 5 private sector banks, 2 foreign banks, 1 cooperative bank and 5 NBFCs. Chandrajit Banerjee, director general, CII, releasing the survey results, said “The impact of Covid-19 has been much worse than the financial crisis faced by the world including India in 2008. While the lockdown was necessary to mitigate the impact of coronavirus on the population, it has had dire implications on the financial conditions of the economy, he added. Sunil Mehta, chief executive, IBA, said low reading of the overall index for the Q1, FY 2020-21 is on the expected lines. Corona virus has created havoc across the world and India is not an exception and preventive measures like lockdown would have adverse effect on the economy, he said.
