Reserve Bank of India (RBI)
Reserve Bank of India (RBI)
File Image

With a clear aim to increase liquidity and credit flow, the Reserve Bank of India (RBI) announced a slew of regulatory measures. This was appreciated by sectors like the bank, NBFC and real estate. Friday’s announcement by RBI has been seen as a follow-up to its March 27 announcement.

How banks see it:

The announcement of classifying bad loans or non-performing asset (NPA) after 180 days instead of the current policy of 90 days of payment default, is seen as a relief by many. Commenting on that, Rajnish Kumar, Chairman, SBI and Chairman, IBA, said, “Providing relaxation to banks by allowing 90-day asset classification standstill for accounts covered under moratorium will imbibe banks with the desired operational flexibility to lend a helping hand to stressed accounts.” This move by RBI will allow the borrowers across retail, small and medium-sized enterprises (SMEs) and corporates avail the moratorium to access additional funding from banks or non-banking financial companies (NBFCs).

Adding to this, Zarin Daruwala, CEO, India, Standard Chartered Bank, said, “Within a month, the RBI has delivered a second booster shot to the economy. RBI’s decisive measures have sent out a clear pro-growth message.” She believes that the appetite for credit delivery will improve due to easing up of liquidity coverage ratio (LCR) to 80 per cent till September end and the NPA relief during the moratorium period.

At present, about Rs 6.9 lakh crore is parked with RBI. In order to move that, RBI announced a 25 basis point cut of reverse repo rate. “Today's cut is a disincentive to overnight investments and should find a way into credit. Additional TLTRO of Rs 50,000 crore has been announced and is likely to continue,” said R K Gurumurthy, Head – Treasury, Lakshmi Vilas Bank.

Commenting about the RBI measures, Radhika Rao, Economist, DBS Bank, said, “Friday’s measures are a follow-up to earlier efforts and fill gaps as seen necessary. The key change was the swift move to provide financing relief to NBFC/ MFIs across categories through a fresh tranche of TLTRO 2.0.”

NBFC: Extra boost

For the NBFCs, the announcement of TLTRO meant the provision of more liquidity. TLTRO is exclusively for banks investing in investment-grade papers such as bonds and CPs issued by NBFCs and MFIs. “This will, in turn, ease the liquidity problem faced by NBFCs and MFIs to some extent, if their lender bank does not provide a moratorium on payment of instalment and interest which they are extending to their customers,” Deo Shankar Tripathi, MD and CEO of Aadhar Housing Finance, said.

Adding to it, Ravindra Sudhalkar, CEO at Reliance Home Finance, said, "The RBI has provided relief to NBFCs and HFCs in the form of liquidity boosters, which will benefit both housing and commercial real estate.”

It is for 'real' estate

RBI has permitted banks to extend the DCCO (date of commencement of commercial operations) in respect of loans to commercial real estate projects delayed for reasons beyond the control of promoters. “This is indeed a big move and will bring much-needed relief to cash-starved developers. It will help in easing out time for maintaining and managing cash flows for these developers,” Anuj Puri, Chairman, ANAROCK Property Consultants said.

Other than lauding the RBI for extending the DCCO, Niranjan Hiranandani, President, NAREDCO, said, “For real estate, the announcement that loans given by NBFCs to real estate companies would get similar benefits as given by the scheduled commercial banks was a ‘positive’ move.”

(To receive our E-paper on whatsapp daily, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

Free Press Journal