RBI’s calibrated steps will help NBFCs, MSMEs and refuel economic growth: PHD Chamber

No.PR-13

April 17, 2020

New Delhi

RBI’s calibrated steps will help NBFCs, MSMEs and refuel economic growth: PHD Chamber

RBI's calibrated steps will strengthen financial system especially the operations of NBFCs and MSMEs and refuel economic growth sooner than later, said Dr. D K Aggarwal, President, PHD Chamber of Commerce and Industry in a press statement issued here today.

The reverse repo rate cut by 25 bps from 4% to 3.75% under LAF is appreciable as it will make it unattractive for banks to passively deposit funds with the RBI and instead lend it to the productive sectors, said Dr Aggarwal.

Hence, cut in reverse repo rate will enhance credit flow to trade, industry and people which is critically required in this extremely difficult time, said Dr Aggarwal.

Measures such as conducting TLTRO 2.0 of Rs 50,000 crore in many tranches for NBFCs of which 50% of the funds are for small and medium sized NBFCs, reduction of liquidity coverage ratio requirement of scheduled commercial banks from 100% to 80% with immediate effect will go a long way in creating liquidity in the economy and mitigate the impact of pandemic COVID-19 on trade and industry, said Dr Aggarwal.

Provision of Rs 25,000 crore to NABARD, Rs 15,000 to SIDBI for refinancing commercial banks, NBFCs and Rs 10,000 to NHB will mitigate the daunting impact of pandemic COVID-19 on trade and industry, said Dr Aggarwal.

Increase in Ways and Means Advances (WMA) limits of States by 60% till September 30, 2020 will help states to better plan their market borrowings and address their fiscal scenarios adequately, said Dr. D K aggarwal.

RBI’s announcement on keeping asset classification standstill on all loan accounts where 90-day moratorium or deferment has been applied is in line with the expectations of PHD Chamber to boost the sentiments of borrowers and industry in this extremely difficult time, amid pandemic COVID-19, said Dr Agggarwal.

Reforms announced for real estate sector including NBFCs' loans to delayed commercial real estate projects can be extended by a year without restructuring and loans given by NBFCs to real estate companies to get similar benefit as given by scheduled commercial banks are highly appreciable to boost the sentiments of real estate sector, said Dr Aggarwal.

Going ahead, PHD Chamber urge the government to provide an increased stimulus relief package of Rs 16 lakh crore which is around 7% of GDP sooner than later to mitigate the impact of Pandemic COVID-19 on economy, trade and Industry through various relief measures and benefits, said Dr Aggarwal.

Calibrated steps taken by the RBI along with the financial stimulus to be provided by the Government sooner than later will help the economic growth trajectory to grow at around 4% against the 2% rate of growth projected by various international organisations, said Dr Aggarwal.

Further, a calibrated approach to get back to work in the unaffected areas of pandemic COVID-19 will help significantly to normalise the operations of trade and industry in the next few months, said Dr Aggarwal.

Ends.

Media Division

PHD Chamber of Commerce and Industry