India Inc. welcomes RBI’s latest relief measures

The Reserve Bank of India (RBI) on Friday announced a slew of measures to infuse liquidity and help corporates, including non-banking financial companies (NBFCs) in the time of the Coronavirus crisis. The RBI announced a ₹1-lakh crore liquidity window for small- and mid-sized corporates, including NBFCs and microfinance institutions (MFIs); a reduction in the reverse repo rate; a relaxation in asset classification for loans that were overdue even before March 31; and extension of the resolution timeline for stressed assets.

India Inc. welcomed the move. Here are some reactions:

Zarin Daruwala, CEO, India, Standard Chartered Bank

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. The easing up of liquidity coverage ratio (LCR) to 80% till September end and the NPA relief during the moratorium period, will improve appetite for credit delivery. The targeted long term repo operations (TLTRO) for the NBFC sector should also help address their liquidity pressures. Ample system liquidity along with the widening of the interest rate corridor to 65 bps, should continue to aid monetary transmission.

Rajnish Kumar, chairman, SBI

The RBI has unveiled TLTRO 2.0 through defined incentivisation for banks that will clearly allow NBFCs and MFIs the benefit of such largesse. The RBI has also provided refinancing support at repo rate to NABARD, SIDBI and NHB that will facilitate resource flow to other deserving entities. 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.

The decision to allow banks to conserve capital by restraining them from dividend payouts will allow banks to retain their capacity in supporting the economy. Extension of the DCCO guidelines to NBFCs in terms of their lending to commercial real estate will help the former in this challenging environment. Overall the second set of packages by RBI is an excellent reflection of combining the policy response and regulatory responses in the most optimal manner.

Kuldip Maity, MD & CEO, VFS

This will help infuse liquidity into the system which is reeling under COVID-19 impact. The liquidity infusion in MFIs will eventually help the bottom of the pyramid borrowers. Special refinance facility for NABARD, SIDBI and NHB is also a positive step. We would also appreciate if RBI clears the confusion on NBFC-MFIs request on moratorium on loan.

George Alexander Muthoot, MD, Muthoot Finance.

Through the TLTRO 2.0 scheme, we expect the liquidity challenges in the system will be eased.  The announcement on reverse repo rate cut by 25bps will motivate banks  to explore further lending opportunities. We appreciate the measures that RBI is taking to combat and stabilise the economy amid the pandemic.

V. P. Nandakumar, MD & CEO, Manappuram Finance Limited

The RBI Governor’s announcement of an TLTRO 2.0 of ₹50,000 crore to be deployed in investment grade NBFCs besides ₹15,000 crore to SIDBI for on-lending or refinancing is a welcome step. Of course, going forward, the size may have to be increased significantly. Earlier, the announcement by the Ministry of Home Affairs allowing NBFCs to restart their operations is a major positive development.

Gurpreet Sidana, Chief Operating Officer, Religare Broking Ltd.

We believe these measures are positive for financial institutions and also for the borrowers amid this COVID 19 crisis as it not only addresses liquidity needs but also ensures their financial stability. Amid all positivity, the requirement of additional provisioning by the banks for the standard accounts that availing a moratorium between 1 March and 31 May have caught the banks off-guard as some banks on account of a short time have offered loan moratorium to all clients who could have otherwise paid EMIs easily.

J C Sharma, VC & MD, SOBHA Limited

We believe that the reduction of the reverse repo rate to 3.75% from the recent 4% will make lending attractive for financial institutions, which will hugely benefit homebuyers and the real estate sector.

Further, we believe that ₹50,000 crores of infusion into the financial system will ease liquidity issues faced by the NBFCs and the MFIs which will result in more funding to the corporate sectors. More importantly, the loans given by the NBFCs to real estate sector will avail similar benefits as given by commercial banks. This was a required step towards both the NBFC and the real estate sector.

Anshuman Magazine, chairman & CEO - India, South East Asia, Middle East & Africa, CBRE

RBI’s recently announced liquidity measures are a clear step towards encouraging liquidity in the banking system, preserving financial stability and supporting overall economic growth.

In the wake of the evolving Covid-19 situation; the announcement in the reverse repo rate cut from 4% to 3.75% should further push banks to lend to the productive sectors of the economy. In addition to this, RBI has also announced that loans given by NBFCs to real estate companies to get similar benefit as given by scheduled commercial banks. Announcement of refinancing facility for leading financial institutions such as NABARD and SIDBI, relaxation of stressed asset classification and resolution norms and provision of another window of Targeted Long Term Repo Operations worth ₹50,000 cr will provide additional fiscal stimulus to the economy.

Jaspal Bindra, executive chairman, Centrum Group

The RBI has shown pragmatism while announcing the second round of measures, aimed at maintaining liquidity and incentivising credit flows. Banks are required to invest a significant portion of the TLTRO with NBFCs & MFIs, is positive as they have been hit significantly. Relief packages of ₹50,000 crore allotted to NABARD, SIDBI and NHB combined with the reduction in reverse REPO rate will incentivise banks and NBFCs to step up their lending activities. Additionally, the 90 day NPA norm won’t be applicable to loans where the moratorium is granted. This along with 1 year extension on loans given to the real estate sector will help preserve asset quality.