Veteran banker KV Kamath said jobs will return once the economy bounces back and the 24 percent economic contraction is not surprising.
Official data released on August 31 revealed that India's economy contracted 23.9 percent in the second quarter of 2019-20.
"Last two quarters have been most impacted by COVID-19. GDP contraction of nearly 25 percent was not a surprise for me," Kamath said in an interview with CNBC-TV18.
A committee led by Kamath had submitted a report to the Reserve Bank of India (RBI), recommending financial ratios lenders can follow during a resolution framework.
Also read: KV Kamath committee report | Will help real estate sector in debt servicing, raise buyer confidence, say experts
"The RBI gave us boundary conditions very clearly to work with. We have tried to see how COVID-impacted borrowers can take advantage of the RBI's recast scheme," he told the news channel.
"We will see complications but surely bankers will take a considered view. There may be cases where cos are unable to repay money," Kamath said.
Banks will have to recast the loans in a manner that payments happen, he said.
While the large percentage of cases are in the eligible category, some extreme cases might require more complex loan restructuring, Kamath added
"Banks should be able to meet challenges on retail front with the leeway given by the RBI. Market needs long-term instruments for infrastructure financing," he added