Suresh P Iyengar
Mid-sized corporates feel the RBI could have provided immediate relief to Covid-hit businesses by enhancing the borrowing limit of the top-rated corporates by 30 per cent and lending them at the prevailing repo rates.
In a series of measures taken on Friday, the RBI cut repo rates (at which it lends to banks) by 0.75 per cent and reverse repo (at which RBI borrows from banks) by 0.90 per cent, besides announcing scores of other measures, including three-month moratorium on term loans.
Manish Dedhia, Managing Director, Mitsu Chem Plast, said the steps announced by the RBI will not be enough for the corporate sector to tide over the unprecedented lockdown of 21 days announced by the government.
Since the overall economy has come to a stand still, he said there are a lot of issues at the corporate level to manage the working capital.
The current issue in the banking system for corporates is not about liquidity, but the ability of corporates to borrow. Most of the corporates have already exhausted their borrowing limit with banks and their is little room to enhance further unless and until further collateral are bought in.
Also, it is not necessary that banks will pass on the benefit of entire repo rate cut to customers, particularly for small corporates, which are already charged 2 to 3 per cent higher than bigger corporates, he said.
Rajesh Ghatalia, CFO and Promoter of Aarey Drugs & Pharmaceuticals, said to help small corporates, the RBI should direct banks to raise the borrowing limits of companies with high rating by 20 to 30 per cent for a certain period and charge prevelant repo rate.
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