The nationwide lockdown that came into effort exactly one month ago to control the coronavirus outbreak in the country has affected all sectors in the country’s economy. Apparently, it also has an adverse impact on the operation of banks and financial institutions. However, most of the major banks of the country have remained open as an essential service owing to a directive from the government.
In this context, Onlinekhabar has recently talked to Standard Chartered Bank Nepal’s Chief Executive Officer Anirvan Ghosh Dastidar about the impact of the crisis and strategies to cope with it.
Excerpts:
The country is under the lockdown currently. How is Standard Chartered providing its services?
In line with the directive of the Government of Nepal and the Nepal Rastra Bank, we continue to provide banking services to our clients. We have a well-tested and robust Business Continuity and Crisis Management Plan in place to ensure the continuity of banking services to our clients. This plan was activated even before the nationwide lockdown was announced. As an international bank, we are present in the countries that have seen the worst of Covid-19 crisis. While this is an unprecedented situation globally, our international access and presence have helped us prepare well in advance. We have vigorous protocols to ensure the safety of our staff and clients.
The staff members providing services to clients from branches adhere to the recommended safety measures such as social distancing, and the use of masks and sanitiser. The clients are screened for temperatures while entering the branches. We are operating our critical departments and limited branches in this situation. The centralised departments of the head office have been operating effectively by keeping minimum staff at the office and rest in work from home (WFH) arrangement. Approximately 50 per cent of our branches operate every day with reduced operating hours on a skeletal model.
We also have a robust technological infrastructure which supports working from home for the majority of our staff and also ensures that the clients’ needs are met even during challenging times like this.
We do have an active digital client base which is garnering full value of our digital capabilities; it has come very handy for us. We were also quick to launch an advanced version of our mobile banking app that enables the clients to access a range of banking services online. We activated a few offers to our clients and offered them attractive discounts for the use of debit/credit cards by tying up with popular outlets like Bhat-Bhateni, Big Mart and Mero Kirana. All our ATMs are up and running. We have received great feedback from our clients, which is very motivating.
What is the magnitude of challenges in the banking sector due to the Covid-19 crisis?
The operational challenges being faced by the banking sector in Nepal are largely being mitigated with support from the regulators. The impending closure of businesses, its impact on the cash flow of the clients and financial impact on the balance sheets of banks are yet to be ascertained. This is largely dependent on how soon we are able to control the Covid-19 spread.
The problem of liquidity in the market is also likely to emanate from subdued economic activities if the containment of the virus takes a longer period. This issue is also being faced globally where we are seeing various policy actions to maintain liquidity in financial markets and support businesses.
With certain norms being reconsidered and with the help of the regulators, we will overcome the challenges. For now, as we speak, the health of the citizens must come first, for which the lockdown is necessary. It is only after that other matters should be discussed.
What extent of damage do you foresee in the banks due to this situation?
I do not foresee any disaster in the banking sector, but we will definitely be facing challenging times ahead that will test the resolve of all. With the understanding and support of the government and regulators, faith and goodwill that the clients place in us, the impact of Covid-19 will be collectively overcome.
This will be relative to how we collectively handle the situation with the help of the government and the NRB. The next few months will definitely result in a slowdown of businesses, but we are certain that we will bounce back and resume with more energy to fulfil what has been missed in between. Since the lockdown starting March 24, economic activities have been subdued. The cash flows of clients have been impacted. This is not only a national but a global issue. Our estimate is that after the control of Covid-19, at least two to three months would be required for things to normalise. Against this backdrop, if appropriate policies are framed, that would be supportive for all of us.
What are a few of the things that the banks should consider during this time?
The safety of staff, clients and community is of utmost importance to us in line with our brand promise of “here for good”. Therefore, we have strictly implemented our health and safety protocols. We will continue to support and cooperate with the government in its effort to minimise impacts on all the sectors.
With respect to staff, the Standard Chartered Bank has already announced that there will be no staff layoffs globally on account of the Covid-19 pandemic. Staff motivation is key to our success. We also feel the mental health of staff during this time of crisis is important, therefore we have made it a point to engage constantly with staff at all levels through virtual meetings, routine communications sent out with updates and our approach to be available whenever anyone is in need of help.
We will continue to be client-centric. The banks must be in close contact with their clients to understand their needs and how to address them best. The Standard Chartered Bank stands to support communities where we operate. We have globally announced an assistance fund worth USD 50 million to those affected by the pandemic. This is in addition to commitment of USD 1 billion of financing, at preferential rates, for companies providing goods and services to help in the fight against the Covid-19. At the country level as well, we are proposing some sustainable and impactful programmes. We remain optimistic and will support keeping our economy resilient.
How do you take the recent decisions made by the NRB in response to the Covid-19 crisis?
The monetary measures introduced by the NRB have focused on protecting and providing much-needed relief to both banks and financial institutions, and clients. Measures on capital, liquidity, loan provisioning, regulatory ratios and regulatory reporting requirements have provided some relief to the banks. The suspension of countercyclical buffer and an increase in refinance facility are expected to give the banking industry an impetus for maintaining credit flows to the market in the current stressful environment. The relaxation of cash reserve ratio will ensure additional liquidity of around Rs 35 billion, fuelling additional revenues for the BFIs through investments in treasury bills and government securities, which will help the economy have cash during this time of need while the policy also ensures the clients benefit from interest discount upon instalment payments.
Additionally, the clients with financial distress due to this crisis can suspend debt payments by three months to Ashad end (mid-July) without any interest charges. Besides, provisions such as loan tenure extension for corporate houses, relief from additional loan loss provisioning and widening the scope of priority sector lending should support both the BFIs and clients.
This is the first time that this generation has faced a pandemic of this nature and we are all learning. The NRB has been supportive based on the facts and feedback that it has received. We are certain that additional support measures for both the banks and clients are being considered. The focus is now shifted from physical banking to digital banking. This is expected to help banks manage costs in the long run and facilitate the clients for convenient banking, which has long been our bank’s standpoint.
Working from home (WFH) has become a buzzword in the banking industry that starts a way forward for the banks to reflect their existing infrastructure like systems connectivity, digital information and business continuity management.
What should be the next steps of the government and the NRB for the banking sector?
The impact of Covid-19 is evolving each and every day. The steps taken by both the Ministry of Finance and the NRB are in a positive direction so far. We can expect expansionary fiscal policies and accommodative monetary policies. The focus should continue to be on liquidity and funding conditions in the market. A new policy guidance should be drafted on new ways of working including working from home, split arrangements and the long-term implications of these arrangements. The business continuity management (BCM) of the banks should be reviewed for adequacy and effectiveness. Deferral of regulatory audits or acceptance of delays in the audit submission should be looked into. Cybersecurity risks must be a part of the consideration, particularly when people work from home.
Banks are providing services during this time, but safety is also very important. How careful are you about this?
Safety of our people is our topmost priority. We have looked into various aspects of staff wellbeing in the current situation and made arrangements for ensuring that the staff are taken care with utmost importance.
About the banking process, we are conscious of the potential elevation of the risks during this situation while we are simplifying processes to provide services to our client. Hence, there is heightened monitoring and tracking of exception to the normal processes.
Our cyber and fraud monitoring centres have increased their surveillance of potential cyber breaches and fraud incidents. Our people have adequate awareness of avoiding any such incidents. We have issued specific guidelines on remote working during the lockdown to help them ensure security standards even while working from home.
This is a time for exhibiting responsibility and exercising caution. We are following all the safety protocols to safeguard the health and safety of our staff, clients and communities.
