RBI Repo rate cut comment by industry experts

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Ms. Jyoti Vaswani, CIO, Future Generali India Life Insurance Company Ltd – “Facing an economic maelstrom, global economies have begun to deliver robust fiscal and monetary response to tackle the coronavirus outbreak. Nations across the world have come up with a mixture of rate cuts, liquidity boosting measures,  tax incentives, loan guarantees, wage subsidies in order to shield their citizens as well as its enterprises from the devastating effects of the pandemic. India is adopting a calibrated approach to managing the covid induced slowdown in the economy. Today RBI announced the second tranche of liquidity boosting measures in an attempt to address the aftermath of the ongoing crisis .  The much needed liquidity support to the struggling  NBFC/HFC /MFI sector in the form of TLTRO 2 and refinancing through NABARD, NHB and SIDBI would aid to ease the incumbent funding and liquidity issues in the sector. The further deduction of reverse repo rate by 25 bps to 3.75% would push the lending by banks to productive channels of the economy. RBI stands ready to take further measures as and when required, which indeed provides further solace to markets and economy”.

 

Mr. Siddhartha Mohanty, MD & CEO of LIC Housing Finance – “Earlier on March 27, the RBI had reduced the repo rate to a 15-year low of 4.40 per cent by announcing a steep cut of 75 basis points. Now there has been reverse repo rate cut by 25 bps to 3.35%. We believe that this will minimise the epidemiological damage in the country due to coronavirus. Along with reduction in repo rate cut it has been announced that the NPA classifications will exclude the three-month moratorium period till May-end, which again is a welcome measure. Hopefully this will further give borrowers and lenders breathing space to stabilize from the unexpected financial and psychological jolt out of this pandemic. The announcement today is a step towards diminishing the coronavirus impact on the economy and ensuring the normal functioning of financial markets”.  

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Ms. Padmaja Chunduru, MD& CEO, Indian Bank“The tone  of RBI is of empathy and support to needy sectors. The TLTRO focused on mid-size NBFCs and MFIs is positive. The 90 day extension in NPA reckoning for  stressed standard assets  as on 1 March effectively postpones NPA classification for accounts that were slipping to NPA between March and  May. Given the optimism around economy coming back in phases and the support being extended through emergency COVID loans and other lines of credit, this will help all sectors , especially MSME  and Retail. The 90 day deferment given  for NCLT filing will help banks, if it can be taken as saving on 20% additional provision in these cases.

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