Industry experts hailed Reserve Bank of India's steps to mitigate the negative impact of coronavirus on the economy. The steps will help in pushing lending rates down, encourage banks to infuse money into productive sectors, infuse liquidity and address the financial stress in the system, they said.
The RBI cut repo rate by 75 basis points to 4.4 per cent. Also, it reduced the cash reserve ratio maintained by the banks by 100 basis points to release Rs 1.37 lakh crore across the banking system. The central bank also allowed banks to put on hold EMI payments on all term loans.
Here's what experts said about RBI's new initiatives to boost economy:
According to Zarin Daruwala, CEO, India, Standard Chartered Bank, the bold steps initiated by the MPC will help financial markets tide over the current situation.
Aamar Deo Singh, Head Advisory, Angel Broking Ltd echoed a similar feeling.
“The measures taken by RBI are a very welcome step in line with the actions taken by major central banks across the world. It’s impact will be visible in weeks and months to come,” he added.
Siddharth Mehta, Founder & CIO of Bay Capital also described the measures as an extremely positively one.
Gurpreet Sidana, Chief Operating Officer of Religare Broking said the announced cut of 75 bps is higher than the market expectation as the majority were anticipating 50 bps and that too during the MPC meet in April.
On giving 3-month moratorium on all the term loans, he added that the move will not only save the urban middle class, industrial borrowers at large but also help the banks (scheduled and cooperative) and NBFCs which are already dealing with the stress of rising NPAs.
"And that, in turn, would reflect into their stock prices too. In short, it’s a win-win situation for all," he added.
On injecting 3.74 lakh crore into the system, Honeyy Katiyal, Founder, Investors Clinic said it will boost market sentiments across industries and bring in some stability to the Indian economy.
Gaurav Chopra, CEO, IndiaLends & President of DLAI (Digital Lending Association of India) described RBI’s initiative as a critical one. He welcomed RBI's steps of providing moratorium of three months on repayment of installments for term loans outstanding as on March 1, 2020.
"However, we await to get some more clarity to see how this gets implemented and the exact benefit to borrowers across different loan classes," he added.
Dr. Joseph Thomas, Head of Research - Emkay Wealth Management said the relief given on the repayments in term loans will remove lot of stress which a large number of borrowers may face in the coming days.
"This is a direct and targeted approach to the fluid situation in the face of an uncertain inflation and growth trajectory. This scaffolds the positive impact of the fiscal measures and strengthens our response to the adverse economic impact of the pandemic," he added.
Hemant Kanoria, Chairman, Srei Infrastructure Finance Limited, said, "Allowing all banks and NBFCs to offer a 3-month moratorium on repayments of all term loans to their borrowers is a positive step. The fact that no borrower’s credit history will get affected because of this provides relief to all categories of borrowers. This will also provide the companies some breathing space to re-draw their strategies and re-invent themselves."
Anuj Puri, Chairman - ANAROCK Property Consultants said the repo rate cut will effectively benefit all sectors including real estate.
"Given this time period, RBI will ensure that the benefit of the rate cut is directly passed on to actual consumers, which could eventually translate into more home loan takers. Additionally, this move of the RBI encourage banks to lend more and also enable industries to borrow," he said.
Ashwin Chawwla- Founder & CEO, Escrowffrr described RBI's moves as critical, well-thought and timely step that will provide much-needed relief and stability to the lives of individuals.
On banks being allowed to participate in NDF market, Amar Ambani, Senior President and Head of Research, YES Securities said that it will help tide over the currency volatility somewhat.
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