RBI liquidity shot to give breathing space to borrowers, lenders, say NBFCs

Non-banking financial companies (NBFCs) on Friday said the RBI's mega liquidity support will give a breathing space to many players and hoped that additional steps couldbe made for the sector badly hit like tourism and aviation due to coronavirus outbreak.

Siddhartha Mohanty, MD and CEO, LIC Housing Finance Ltd said the RBI move will ensure sufficient liquidityin the system at a time when anxious moments are around due to Covid 19 situation.

Repo rate cut, slashing of reverse repo rate and reduction in CRR are welcome measures. We believe the announcement of allowing the lending institutions such as banks and housing finance companies to provide a 3-month moratorium gives borrowers and lenders breathing space to stabilize from the unexpected financial and psychological jolt out of this pandemic," Mohanty said.

 

The announcement is a step towards diminishing the coronavirus impact on the economy and ensuring the normal functioning of financial markets, Mohanty added.

"The announcement brings much needed immediate relief to the borrowers across sectors. We further expect additional special relief packages to be provided to the sectors worst affected such as aviation, tourism to name a few," saidAnirban Chakraborty, Managing Director & CEO ofTourism Finance Corporation of India Ltd.(TFCI).

Hemant Kanoria, Chairman, Srei Infrastructure Finance Limited said allowing all banks and NBFCs to offer a 3-month moratorium on repayments of all term loans to their borrowers is a positive step.

This will also provide the companies some breathing space to re-draw their strategies and re-invent themselves, he said.

"The 75 bps cut in repo rate by the RBI to reduce the cost of borrowing and 100 bps cut in CRR to boost the liquidity in the system is a welcome move,"George Alexander Muthoot, MD, Muthoot Finance said.

Also, the long term repo operations (LTRO) issuances where the liquidity generated by the banks is to be invested 50 per centin primary and remaining 50 per cent in secondary market is quite supportive for the NBFC sector, he added.

Expressing his displeasure, Vishal Kampani, managing director of JM Financial Group, said, "There is a need for more concrete measures for each sector, including NBFCs (non-banking financial companies). The cautious outlook given by the RBI itself warrants for bigger steps."

But, he was quick to note that the measures announced will go a long way to help the economy tide over the crisis arising from the coronavirus pandemic and said that liquidity injection into the strained financial system is the first step in the right direction.

Nirmal Jain, Chairman, IIFL Group said,Liquidity booster, rate cut and moratorium is a complete package for the time being. The government needs to take measures to revive demand as soon as lockdown is lifted. RBI does whatever it takes to make banks, markets Covid-19 resistant.

Deo Shankar Tripathi, MD and CEO of Aadhar Housing Finance said, "Huge liquidity infusion of Rs 3.74 lakh crore,100 bps CRR cut, long term Repo auction, 3 months moratorium on loan repayment and deep repo cut of 75 bps. Huge interest reduction to all retail and home loans linked with repo...Coordinated efforts of Government and RBI will help Indian Economy to come out of these challenging times.

RBI Governor Shaktikantha Das has made the right move by addressing the nation right away given the unprecedented economic reality that we are experiencing today, saidHardika Shah, Founder & CEO, Kinara Capital.

"As the COVID-19 situation unfolds, our hope is they will continue to ease the economic burden on MSMEs who are the backbone of the Indian economy, saidShah.

Ravindra Sudhalkar, ED & CEO, Reliance Home Finance said it is overall a very progressive announcement but the market evolution post this announcement and related macro-economic situation that will shape up in the next quarter is a wait andwatch as the GDP projection has been revised to 3.5 per cent.

Shachindra Nath of Ugro Capital said the moratorium on repayment will help NBFCs and small finance banks extend more money to help small businesses tide over the difficult phase.

Meanwhile, the Microfinance Institutions Network welcomed the RBI measures to minimise the impact of coronavirus on the lives of 5.6 crore microfinance borrowers.

Industry concerns have been addressed with the back-to-back facility of a three-month moratorium on loan repayments and the measures taken to infuse additional liquidity into the system, MFIN Chairperson Manoj Kumar Nambiar said.