“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.”
By- Rajesh Sharma, Managing Director, Capri Global Capital Ltd
RBI has been very pragmatic in its approach towards handling the Covid crisis. While RBI has not announced a blanket moratorium today, stressed borrowers have been given a choice to opt for resolution if required. This will ensure that only those who genuinely need restructuring of their loans will approach the banks. At the same time, it will help counter financial stress in the system. As an integral part of India’s banking system with technology led delinquency management, Creditas will also continue to guide individual borrowers on timely payments and opting for resolution mechanism if required, as mandated by RBI.”
By – Anshuman Panwar, Co-Founder, Creditas Solutions.
“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, Managing Director, Experian India
RBI Move to support the SFBs and Ease Out Liquidity to the Last Mile SMEs
” The RBI move to create an Rs.10,000 crore Special LTRO for SFBs is very well-timed and a highly proactive move to ease out liquidity to the last mile SMEs amid a raging pandemic. Equally, the loan amount is capped at Rs 10 lakhs to efficiently reach the intended beneficiaries. It is heartening to note that the central bank has rightly acknowledged the role of SFBs as a true conduit for the last mile supply of credit to India’s growth engine.
The relaxation in KYC requirements is a very welcome step for all regulated entities, but more so for the pre-paid instruments and wallets. Conversion and recognition of limited KYC accounts – opened in non-face-to-face Aadhaar-based e-KYC mode – to fully KYC-compliant accounts will go a long way in popularising wallets among customers. The extension of time for updating KYC till December 31, 2021 without any restrictions on customer accounts shows the caring and thoughtful side of the regulator.”
Ketan Doshi, MD at PayPoint India
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.
CH. S.S Mallikarjuna Rao, MD and CEO of Punjab National Bank
