RBI governor discusses NBFC liquidity, moratorium with bank chiefs

The meetings were also attended by deputy governors and other senior officers of the central bank, RBI said in a statement on its website

Reserve Bank of India (RBI) governor Shaktikanta Das separately met on Saturday chiefs of public and private sector banks to review India's economy, liquidity of non-bank financial companies (NBFC) and a moratorium for lenders during the coronavirus pandemic.

Deputy governors and other senior officers of the central bank attended the video meeting, too, said the RBI in a statement on its website.

Das took stock of “credit flows to different sectors of the economy, including liquidity to Non-Banking Financial Companies, Micro Finance Institutions, Housing Finance Companies, Mutual Funds, etc.”

He praised banks for their work during a national lockdown to contain the coronavirus, and stressed on ensuring credit “with special focus on credit flows to MSMEs (micro, small and medium enterprises),” the statement said.

Das enquired about the implementation of a three-month moratorium the central bank has announced for repayment of loan installments. The Supreme Court told the RBI on Friday to ensure that banks pass on the moratorium benefits to the customers properly. 

The central bank told banks to monitor their overseas branches because of the slowdown in economies across the globe. The meeting also saw discussions around the stability of the financial sector, the RBI statement said.

Early this week, finance ministry reviewed support including emergency credit line extended by large public sector banks to units impacted by Covid-19 triggered lockdown. State Bank of India and Bank of Baroda have together sanctioned close to Rs 10,000 crore as an immediate credit assistance to affected units.

Banks have built internal capacities for assisting companies including MSMEs. The feedback from interactions is expected to act as input for policies that are in works. However, it was not clear when the package would be finalized, officials said.

Credit growth in almost every sector decelerated in March 2020 from a a year ago as the country went into a nationwide lockdown due to the coronavirus (Covid-19) crisis, data released from the RBI showed.

On a year-on-year basis, credit growth in the banking system decelerated to 7.6 per cent in March 2020 from 12.3 per cent in March 2019. Credit growth to agriculture and allied activities decelerated to 5.2 per cent from 7.9 per cent in March 2019, and credit growth in industry decelerated to 1.4 per cent in March 2020 from 6.9 per cent a year ago.

Within industry, credit growth accelerated in beverage & tobacco, mining & quarrying, petroleum, coal product & nuclear fuels, cement & cement products and vehicles, vehicle parts & transport equipment. However, credit growth contracted in chemical & chemical products, all engineering, glass & glassware, gems & jewellery and infrastructure decelerated.

The services sector contracted to 8.5 per cent in March 2020 from 17.8 per cent a year ago. Growth in personal loans decelerated marginally to 15.7 per cent in March 2020 vis-à-vis 16.4 per cent in the same period last year.