In ophthalmic terms,  20/20 means clarity or sharpness of vision. Ironically, 2020 has started with anything but that. Anywhere you look there is uncertainty, concern and a looming feeling of upcoming serious problems..

• The US-China trade war,
• The most recent eye to eye of USA and Iraq,
• The increasing compromised values, principles and ethics in politics,
• The natural disaster in Australia

 — all point to a not so stable planet this year and …its not been 10 days into the year.

In the financial sector, 2019 saw the catastrophic consequences of two otherwise well reputed companies

• IL&FS and DHFL – failing for different reasons.
• The PMC Bank crisis then was the proverbial last straw – I hope.

No one thought that these three collapses will have the contagion impact on the sector as it so turns out to be – and the story is still work in progress. Enough has been written about these two organisations – what matters is for all of us to learn some underlying lessons and far reaching impacts as a consequence. So:

1. The banks and mutual funds have lost confidence in the NBFCs and HFCs and generally refuse to lend or roll over earlier loans .
2. Credit expansion has slowed down impacting real estate, the auto industry and others too.
3. Consumer confidence is shaken and people are more careful in spending which in turn impacts credit growth and manufacturing.
4. The real estate sector has huge stressed assets to deal with and further unsold property and incomplete property is an upward rising graph.
5. Individual depositors have struggled to recover deposits they placed with these Instituions – deposits probably placed thru incentivised brokers with conflict of interest.
6. Shareholder value has eroded – in these companies.

Then we have political issues causing agitation and violence, an economic slowdown, rising oil prices and most importantly a feeling of gloom and “worse to come” – which may not be untrue.

As a collective country, whilst we cannot do much at the global level, nationally, we need to,  together break this downward spiralling sentiment. As various positives are initiated, like

• Sector specific initiatives from the Government (the real asset stressed fund),
• A response by the real estate industry,
• The banks regaining confidence in good quality borrowers in the sector,
• Regulatory responses to try  and ensure no repeats from the lessons learnt and
• Quick resolution of the current issues with any institution that finds itself distressed will actually help in making 2020 take the first steps to a fresh start.

Specific initiatives will happen, but a nationwide will and determination is required with several stakeholders “biting the bullet”.

It’s also the year of the cricket T20 World Cup – and Blue is the colour to adorn the cup !!