The fallout of the lockdown due to Coronavirus would range from banks having a tight leash in the future and disappearance of astronomical valuations for start-ups, the elder statesman of Indian finance told investors over a webinar.
He took the opportunity to warn investors that leverage could haunt many as it would prove to be a double edged sword.
These are according to Whatsapp forwards by investors. HDFC confirmed the webinar.
Parekh said that the government is likely to come with more stimulus to tide over the impact of job losses, stoppage in production and fall in demand, underscoring the need for simplification of investment norms and tax rules.
He said that resuming manufacturing is going be difficult as the labour force will be forced to choose between life and livelihood. The labour-intensive real estate and housing sector has also been hit severely.
On the financial sector, Parekh called for more regulation for non-bank lenders and the need to make the financial sector stronger to save it from collapsing as India fights the coronavirus pandemic, which is completely different from the one the economy had seen in 2008. He has voiced against doling out licences in the already crowded NBFC space.
Indian banks have a Rs 12 lakh crore exposure to the NBFC sector, the resilience of which has been put on test since the IL&FS-crisis that snowballed into a credit crisis for the entire sector.
He said the authorities would have stepped up and did the the same for PMC Bank and IL&FS, alluding the way the government handled the YES Bank crisis through public-private partnership.