Going ahead, financial institutions in India have to walk a tightrope  in nurturing the economic recovery within the overarching objective of preserving long-term stability of the financial system. The current COVID19 pandemic related shock will place greater pressure on the balance sheets of banks in terms of non-performing assets, leading to erosion of capital.
Building buffers and raising capital by banks – both in the public and private sector – will be crucial not only to ensure credit flow but also to build resilience in the financial system.