RBI Governor Shaktikanta Das announced additional measures for MSME, Small Businesses and Individuals to help counter the impact of pandemic. NewsBarons connects with leading industry leaders to share their perspective.
Timely decision to ensure stability and economic revival: Anshuman Magazine
With today’s announcement, RBI focused on the revival of the Indian economy by adding adequate liquidity that ensures further stability of the overall market in the current scenario. The COVID loan scheme will boost economic activity and aid the growth of the MSME’s sector as well.
The announcement of restructuring of loans for small borrowers is a proactive move as it will provide some relief against asset downgrade and also provide relief to lenders. Liquidity support to the healthcare sector is also a commendable step. These decisions by the central bank to tackle the current situation are much appreciated and well-timed to ensure stability and economic revival.
[Anshuman Magazine is the Chairman & CEO, India, South-East Asia, Middle East & Africa of CBRE]
The measures taken by RBI are well-timed: Rohit Poddar
With the fresh challenge of the historic rise in COVID cases and shortages of vaccines owing to the fury of the second wave of the pandemic, the measures taken by RBI are well-timed. The restructuring of loans for loans under 25CR by NBFC is a smart move to ease the burden on the borrower. SMEs and MSMEs have played a critical role in driving the economy over the last few years. Furthermore, the MSME sector has had a restructuring window since March 2019, and extending it by two years would not only benefit the MSME sector but will also help the system in generating more liquidity.
[Rohit Poddar is the Managing Director of Poddar Housing and Development Ltd.]
Proactive measures by the RBI are welcome and reassuring: Rajani Sinha
The battle with COVID-19 has prolonged over a year now and while the country was coping well until early this year, the second wave of infections in March has translated into significant loss of lives. Presumably on economic output, the dent will depend on the timeline of this wave and associated regional lockdowns. Hence, proactive measures by the RBI are welcome and reassuring. Expansion of liquidity window particularly to the healthcare sector is a need of the hour. Besides, additional liquidity window and resolution mechanism for loan restructuring for small and medium business will cement their position to cope up with the adverse demand conditions created by this more severe wave of pandemic. We believe that the central bank will keep its guard on in the ensuing period and take steps as warranted by the evolving on ground economic situation.
[Rajani Sinha is the Chief Economist & National Director – Research at Knight Frank India]
Proactive set of announcements for all stakeholders: S.S Mallikarjuna Rao
RBI has come out with a timely and proactive set of announcements for all stakeholders, including individuals, small businesses, and MSMEs, to mitigate the incipient challenges and support growth impulses at the ground level. Simultaneously, measures have been announced for the lending institutions as well as the State governments to ensure ample liquidity & credit flow support.
The On-tap liquidity of Rs 50,000 crore for covid related health care sector along with the incentives for banks like priority sector classification and higher interest on surplus liquidity window will ease access to emergency health services and reaffirms the immediate objective of preserving life and livelihood. Similarly, Special Long term Repo Operations for SFBs (SLTRO) of Rs 10,000 Crore will facilitate last-mile credit delivery to MFIs adversely impacted by the current wave of the pandemic. The announcement of the second purchase of Government Securities of Rs 35000 Crore under GSAP assures further liquidity supply.
Reopening of one-time Restructuring for individuals and MSME, incentivizing credit flow to MSME borrowers and Covid Resolution framework 2.0 will help address the uncertainties faced by the most vulnerable sections. Allowing OTR 2.0 to Individuals, Small businesses & MSMEs having aggregate exposure up to 25Cr who have not availed restructuring earlier and who were classified as standard as of 31.03.2021 is a positive step for the lending institutions with borrowers having cash flow issues due to the COVID pandemic shall get relief. Permitting individual borrowers and small businesses to modify the restructuring plan to the extent of total tenor up to 2 years shall also help such borrowers who have availed OTR 1.0 with truncated moratorium, shall ease the cash flow. Allowing reassessment of working capital cycle, margin etc., to small businesses & MSMEs restructured earlier shall help align the working capital cycle to the present business environment.
At this crucial juncture, what is comforting is the fact that RBI remains optimistic of India’s resilience & post pandemic future, along with its commitment to deploy all resources in its command in a battle readiness mode.
[S.S Mallikarjuna Rao is Managing Director and CEO of Punjab National Bank]
RBI Governor’s address has provided a much needed re-assurance in these times of uncertainty: Sanjay Palve
RBI Governor’s address has provided a much needed re-assurance in these times of uncertainty. The speech highlighted RBI’s constant efforts to stabilise the economy and provide relief to the ailing and badly hit sectors due to the second wave of the pandemic. The announcement of schemes such as the second round of loan restructuring and Banks being incentivised to extend swift credit to weak sectors are all steps in the right direction. The priority right now is to save lives and the On-tap liquidity facility of Rs 50,000 crore to ease access to emergency health services is just what the country needs. We all need to stay strong and united to overcome this unprecedented situation and the RBI and our government are taking all measures in their capacity to achieve this”
[Sanjay Palve is the Senior Managing Director of Essar Capital Ltd.]
RBI should take into consideration the needs of the real estate sector: Dhruv Agarwala
The Reserve Bank of India has reiterated its commitment to mitigating the damage due to coronavirus by providing support to many quarters, including a Rs 50,000 crore Term Liquidity Facility, to ease access to emergency health services. The real estate sector was anticipating steps such as assistance in loan restructuring and a moratorium to help it get through these difficult times. In its next announcement, the RBI should take into consideration the needs of the real estate sector.
[Dhruv Agarwala is the Group CEO of Housing.com, Makaan.com and Proptiger.com]
RBI has made a bold attempt to minimise the likely distress in the banking system: Neeraj Dhawan
With today’s proactive announcements, the RBI has once again shown that it is ahead of the curve when it comes to dealing with the impact of restrictions on the economy. The central bank recognises the fact that unlike the impact of the Covid wave last year, the broader economic activity is more or less on track, but the short-term financial implications on individuals and small businesses need to be reduced through additional liquidity and easing measures that can be routed through the banking system.
Thus, the extension of the resolution framework period is a timely and welcome move as the RBI has made a bold attempt to not only minimise the likely distress in the banking system, but also improve the confidence among marginal borrowers by giving them more time, thereby reducing wide-spread defaults.
By allowing limited KYC till December 31, 2021 in accounts where periodic KYC updating is due or pending, the RBI has certainly eased customer concerns regarding day-to-day financial transactions including on-time loan repayments, and any potential defaults. Equally, the extension of Video KYC to more categories will enhance customer convenience, assisting lenders to achieve timely regulatory compliance in terms of KYC rules.
[Neeraj Dhawan is the Managing Director at Experian India]
An ambitious effort to strengthen the Indian economy: Rajesh Sharma
Today’s fiscal announcement by RBI announcement has come at an opportune time and shows a certain amount of optimism in the hardship of an unfortunate pandemic. The targeted announcement by the central bank shows an ambitious effort to strengthen the Indian economy. Opening a one-time restructuring window for individuals and MSME till September 2021 will give an impetus to scale up their business without worrying about financial destitution. Also, the extension window for the earlier availed borrower would ease liquidity challenges and facilitate meeting the objective of inclusive growth. Additionally, On-tap liquidity of Rs 50,000 crore at repo rate and qualification of priority lending is focusing on strengthening the health infrastructure of the country.
[Rajesh Sharma is the Managing Director of Capri Global Capital Ltd.]
Real estate sector will benefit from the economy’s health: Amarjit Bakshi
We welcome the first round of measures announced by the RBI. The steps such as one-time loan restructuring to small borrowers and MSMEs or Term Liquidity Facility for emergency health services will ensure that the economy stays on the growth path. The real estate sector will benefit from the economy’s health, which will translate into buyer confidence looking to stay in secured gated communities away from the cascading effects of the pandemic on health.
[Amarjit Bakshi is the CMD of Central Park]
The extension of availing loan restructuring for SMEs is a welcome step: Dr. Vidya Mahambare
RBI’s liquidity enhancing measures announced are aimed at encouraging banks to lend to targeted sectors such as healthcare and small borrowers. With sufficient liquidity already available with banks it is not clear as to why the flow of funds to these sectors would increase with minor incentives. The extension of availing the loan restructuring for SMEs is a welcome step. Also announced was the next round of purchases of outstanding government securities by the RBI later this month which should lower the pressure on G-sec yield and thus on the lending rates in general.
[Dr Vidya Mahambare is the Professor of Economics and Finance at Great Lakes Institute of Management, Chennai]
We anticipate that real estate sector will be given due consideration in the next round of announcements: Amit Modi
After the first wave subsided in 2020, the economy was in a better place, but the situation has dramatically changed after the second wave hit the country. The RBI eased lending and restructuring norms for all stakeholders, particularly those smaller businesses and MSMEs that have been impacted by the second wave, as part of the first round of comprehensive strategy against the pandemic. We are confident that it will amplify the positive sentiment seen in Q1 2021 across all sectors, including the real estate market, which outperformed expectations with a significant increase in sales. We anticipate that the sector will be given due consideration in the next round of announcements, allowing for further progress.
[Amit Modi is the Director ABA CORP & President (Elect), CREDAI Western UP]
RBI has taken measures to restore investor faith: Sarthak Gaur
The country’s current condition must be balanced with calibrated, sequenced, and well-timed policy steps. The Reserve Bank of India (RBI) has taken measures to restore investor faith. The relief provided to vulnerable category borrowers, such as individuals, small businesses, and MSMEs, is much-needed, as localized restrictions have disrupted them. The improvement in this segment would lead to an improvement in the mall segment, which has been in a difficult situation in some cases due to losses faced by the retailers. Overall, the first round of announcements was fair and balanced, addressing the most pressing issues.
[Sarthak Gaur is Director at Gaurs Group]
The absence of a moratorium announcement will be viewed positively by the market: Akshay Taneja
The absence of a moratorium announcement will be viewed positively by the market, implying that the situation is not dire enough to warrant another moratorium. The RBI’s actions are unlikely to give the market a big boost, but they are likely to provide downside support and boost morale. However, the pandemic has had a wide impact on the industry. A rollout of wider relief initiatives aimed at mid-corporate and large borrowers, and industries heavily affected by the pandemic, such as real estate, hospitality, would have been beneficial.
[Akshay Taneja is the Managing Director of TDI Group]