The RBI's decisions to cut key rates and give three-month moratorium on all term loans will boost liquidity and ease burden on those who are most affected by the ongoing 21-day nationwide lockdown imposed to contain the coronavirus outbreak, West Bengal Inc said on Friday.
Industry's reaction came after the Reserve Bank of India, earlier on the day, allowed banks to put on hold EMI payments on all term loans for three months and slashed the cost of fresh borrowing by cutting policy interest rate by steepest in more than 11 years.
"The urgency showed by the RBI to bring forward the MPC meeting and the slashing repo rate by 75 bps are welcome measures by the central bank," Bandhan Bank MD and CEO C S Ghosh said.
The focus clearly is to raise "liquidity in the system, which is also the need of the hour, while ensuring that the burden of repayments is eased on those who are most affected by the lockdown", he said.
The apex bank said the measures will infuse a massive Rs 3.74 lakh crore liquidity as it joined the efforts of the government to counter the economic fallout of coronavirus pandemic.
Also Read
City-based industry body MCCI welcomed "RBI's multi- pronged approach to ease COVID-19-related liquidity constraints".
The move to cut the repo rate to 4.4 per cent and reduction of CRR to 3 per cent will inject the much-needed liquidity into the sagging system and help in reviving investment and growth in the short-to-medium terms, it said in a statement.
Recognising the urgency of initiating a monetary policy response to the Covid-19's economic shock to the economy, the RBI brought forward by a week the key meeting of the monetary policy committe.
The apex bank said it will retain its accommodative stance as long as it is necessary to revive growth and mitigate the impact of coronavirus on the economy.
EEPC India Chairman Ravi Sehgal said the moratorium on all loan repayments for three months and cut in the interest rates would help exporters as well.
"The export sector has been the worst-hit by the outbreak of coronavirus and would thus need bigger package of relief," he said.
The moratorium on loan repayments should be extended at least to six months to one year for exporters, since the global economy is set to be slipping into a recession, he said.
Microfinance Institutions Network, a self-regulatory organisation of the sector, also applauded the measures announced by the apex bank, saying that it will minimise the impact of COVID-19 on the lives of 5.6 crore small borrowers across the country.
The RBI on Friday refrained from making any projections for growth and inflation saying the performance of these two key macroeconomic parameters in the days ahead would depend upon the intensity, spread and duration of COVID-19.
Disclaimer: No Business Standard Journalist was involved in creation of this content
