Letters

Letters to the Editor dated March 27, 2020

| Updated on March 29, 2020

A positive move by RBI

The steps taken the RBI along with the welfare measures announced by the Finance Minister on March 26 will certainly reduce the hardships of people and the industry. The auctioning of targeted term repos and reduction of CRR will improve the liquidity of banks which is likely to be impacted due to delay in repayments by customers.

However, the excess liquidity should be utilised cautiously and, if required, prudential limits for borrowers have to be relaxed if banks find worthy investments.

Besides adjusting the drawing power for working capital limits, short term ad-hoc limits may also be considered by banks and these should not be seen as evergreening.

The performance of many corporates is likely to be affected due to the current lockdown and the rating agencies should also take a pragmatic view while reviewing the ratings.

The moratorium given for term loans and working capital could have been extended for credit card dues also.

M Raghuraman

Mumbai

Self-contradictory

The RBI’s latest monetary policy is self-contradictory. On one hand, the central bank has cut repo rate, CRR and increased loans to banks under MSF, etc., to increase liquidity of banks to the extent of ₹3.74 lakh crore.

On the other hand, the RBI has reduced the reverse repo rate from 4.90 per cent to 4 per cent stating that banks are parking their excess liquidity of ₹3 lakh crore with the RBI.

This means that the real problem of banks is not lack of liquidity, but lack of viable demand for credit. This problem cannot be addressed by traditional policies. The government has to address the fear psychosis of bank managers from investigating agencies. Bank managements cannot be 100 per cent successful. The earlier this is understood by the government, the better.

EV Ramanarayanan

Calicut

 

Timely action

This refers to ‘RBI cuts repo rate by 75 basis points’ (March 27). The decision of the MPC to lower the key repo rate by 75 bps to 4.4 per cent along with simultaneously downing the reverse repo rate by 90 bps was timely.

What else could have been expected of it when the Indian economy is currently faced with a major slowdown on account of the Covid-19 outbreak. However, it may be significant to observe that the six-member MPC was not unanimous in its decision since it reportedly voted 4-2 in its favour. But then, RBI Governor Shaktikanta Das clearly seemed to be in favour of the proposed cut even as he went on to announce a slew of other far-reaching measures while claiming that the 'need of the hour is to shield the economy from the pandemic'.

It may be added here that various key central banks had slashed their interest rates soon after the word-wide invasion of the Covid-19 and the the RBI seems to be following their footsteps. Of course, very rightly so.

SK Gupta

New Delhi

Govt doing its best

One often finds citizens criticising government agencies for one reason or the other. However, today is the time to appreciate our government, be it the Central ministries or various departments of State governments who are working day and night for the safety and security of the citizens of this country in these difficult times; and yes, with limited/skeletal staff. The Prime Minister is leading from the front, leaving no stone unturned to defeat the deadly coronavirus.

While the government is doing so much for its citizens, it becomes our solemn duty to respect and honour the government's instructions so as to contain the spread of Covid-19. Support by all the private agencies in these difficult times is also much appreciated.

Needless to mention, the efforts put in by our medical fraternity, police personnel, civic administration and also the courts, which are taking suo motu cognisance of the situation and passing orders that are in the best interest of our country and its citizens, are praiseworthy.

Meera Jhangiani

Gurugram, Haryana

LETTERS TO THE EDITOR Send your letters by email to bleditor@thehindu.co.in or by post to ‘Letters to the Editor’, The Hindu Business Line, Kasturi Buildings, 859-860, Anna Salai, Chennai 600002.

Published on March 27, 2020

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