Mumbai: Industry players said RBI’s second financial stimulus is expected to ensure adequate credit flow to the productive sectors of the economy. However, they insist that it is not enough, and RBI needs to give mandate to the banks to provide additional working capital required for the revival after the coronavirus crisis.
FICCI President Dr Sangita Reddy observed that the economy and industry need a heavy dose of liquidity infusion and the financial intermediaries need the confidence that the steps they take to support industry in this hour of crisis will be viewed leniently and not attract regulatory actions in terms of asset reclassification and attended provisioning.
She said FICCI is looking forward to RBI coming out with more such measures in due course as the requirements of the economy are much larger.
‘’Overall, it has been a comprehensive set of announcements today. Of course, we were also looking forward to allowing NBFCs and MFIs a moratorium on their loans from the banking sector as this is extremely crucial given that NBFCs and MFIs have to offer a moratorium to their borrowers.
Further, on the asset quality related accounting treatment, we hope RBI will engage with the Ministry of Corporate Affairs and suitable notifications will be issued,’’ said Dr Reddy. IMC Chamber of Commerce and Industry President Ashish Vaid asserted that RBI’s slew of measures will give a massive liquidity push to the economy.
On the other hand, CII Director General Chandajit Banerjee said the RBI’s move to pare the reverse repo rate by 25 bps to 3.75 per cent under the LAF is expected to discourage banks from parking their excess funds with the central bank. It can be hoped that when the monetary policy committee meets, the repo rate will also be reduced.
‘’CII is encouraged by the curious optimism provided by the RBI Governor when he said that though the macro economic landscape has deteriorated severely in some areas, India is still among the handful countries projecting positive growth,’’ he noted.
ASSOCHAM President Niranjan Hiranandai viewed that today’s targeted liquidity transfusion measures aimed to improve the yield curve and incentivize banks to deploy more funding to the industry seems to be a kick-start step towards financial resilience.
