Bankers were thrilled to hear the spate of measures announced by Finance Minister Nirmala Sitharaman to boost the economy and revive demand in crucial sectors like automobiles.
Her announcement to provide upfront capital infusion of ₹70,000 crore into PSBs was hailed by banks, especially the weaker ones. This is expected to provide additional lending and improve liquidity to the tune of ₹5-lakh crore in the economy.
“Anything good for the economy is good for banks. The measures announced today (Friday) by the Finance Minister will have a positive impact on the economy and therefore help banks as well,” Mukesh Kumar Jain, Managing Director and CEO, Oriental Bank of Commerce, told BusinessLine here.
He said that the latest set of measures would aid banks as it would remove the current stress levels in sectors such as automobiles and MSMEs. However, Jain made it clear that OBC was not looking for any allocation from the ₹70,000 crore earmarked for fresh capital infusion.
Besides upfront capital infusion, the Finance Minister also said that banks would pass on rate cuts through MCLR reduction to benefit all borrowers.
There will also be reduced EMI for housing loans, vehicle and other retail loans by directly linking repo rate to interest rate. Working capital loans for industry will also become cheaper.
To reduce harassment and bring in greater efficiency, public sector banks will ensure mandated return of loan documents within 15 days of loan closure. This will benefit borrowers who have mortgaged assets.
Finance Industry Development Council Chairman Raman Aggarwal hailed the move to allow NBFCs to use the Aadhaar authenticated bank KYC to avoid repeated processes.
For housing finance companies, the government has now promised additional liquidity support of ₹20,000 crore by National Housing Bank, taking the overall support in recent weeks to ₹30,000 crore.
Ravindra Sudhalkar, ED and CEO, Reliance Home Finance, said: “Additional liquidity support to the housing finance companies (HFCs) increased to ₹30,000 crore from ₹20,000 crore by NHB is encouraging. As well as banks deciding to pass on rate cuts to customers is another significant move and hopefully the NBFC sector which has been reeling under pressure due to lack of liquidity will see much better times going forward.”
Sanjaya Gupta, Managing Director, PNB Housing Finance, said that the additional liquidity of ₹20,000 crore to HFCs is a welcome move which will lift the sector sentiments.
“Industry at large has been looking forward to such initiatives to boost the liquidity and overall economy. It will support growth and ease the liquidity crunch in the housing finance sector. This will help to ease the pressure. The initiatives announced have potential to kick start a sluggish real estate sector,” he said. .
Ashish Shanker, Head- Investment Advisory, Motilal Oswal Private Wealth Management, said, “This should help stir positivity and gradually bring back animal spirits. The steps taken to infuse liquidity in the banking and NBFC sector should help alleviate stress in the system and set in motion the recovery process.”