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Bankers have welcomed the slew of measures announced by the Reserve Bank of India (RBI) on Wednesday noting that the Central bank has continued to calibrate its policy throughout the Covid-19 pandemic and will help to manage the stress in the economy.
“The decision to create a dedicated ₹50,000 crore fund for ramping up the Covid-related healthcare infrastructure reflects the RBI’s commitment to transcend boundaries by addressing not only economic health but also public health. The decision to augment the lending firepower of Small Finance Banks (SFBs) through the priority sector tag is a very welcome move,” said Dinesh Khara, Chairman, State Bank of India. He added that the restructuring framework, the CRR flexibility for lending to SMEs, and the measures to help State governments through WMA relaxation are all aimed to tide over the short-term economic disruptions.
‘Addressing uncertainties’
SS Mallikarjuna Rao, Managing Director and CEO at Punjab National Bank also said the RBI has come out with a timely and proactive set of announcements. “Reopening of one-time restructuring for individuals and MSME, incentivising credit flow to MSME borrowers and Covid Resolution framework 2.0 will help address the uncertainties faced by the most vulnerable sections,” Rao said.
The Microfinance Institutions Network (MFIN) welcomed the move to infuse liquidity for small MFIs. “As the SFBs understand the market well, it should lead to tangible liquidity flow. By allowing lenders, the flexibility to restructure microfinance loans on a case-to-case basis is also welcome as it will provide relief to stressed clients,” it said.
Ramesh Iyer, Managing Director and VC, Mahindra Finance also said that the relief measures by RBI are timely. “The restructuring framework is an important announcement looking at the present economic landscape, this will provide as an impetus for businesses to recover from the Covid -19 pandemic blues,” he said.
Srikanth Vadlamani, Vice President, Senior Credit Officer-Financial Institutions Group at Moody’s Investors Service said that the restructuring framework is much milder than the blanket loan moratorium given last year and the proportion of the restructured loans will be lower. “Nevertheless, the need for this measure highlights the re-emergence of downside risks to banks’ asset quality,” he pointed out.
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