Post the RBI announcement, here are the views of

Post the RBI announcement, here are the views of Mr. George Alexander Muthoot, MD, Muthoot Finance.

“We welcome the RBI announcement to cut the repo rate by 40 bps which will infuse liquidity into the system in such challenging times. Also, the reduction in reverse repo rates will discourage banks to park idle money with RBI and lend further.

We appreciate the decision of extending the moratorium by three months thereby providing the much needed relief to the borrowers. It will help in reducing the repayment pressure and provide necessary time to analyze the cash flow status. We believe RBI measures will aid in restoring the financial health of the economy.”

Post the RBI announcement, here are the views of

Post the RBI announcement, here are the views of Mr. Umesh Revankar, MD and CEO, 

Shriram Transport Finance.

“Given the current economic scenario, RBI announcement to cut the repo rate by 40 bps is in line with India Inc expectations. 

With lockdown reaching its near end and businesses are resuming, we hope banks will now be encouraged to start lending to essential sectors like MSMEs and NBFCs to kickstart the economy. 

The reduction in reverse repo rate will discourage banks to park money with RBI.

We appreciate all the efforts taken by the RBI and Finance Ministry to stabilize the economy .”

Mr. Satish Magar, President, CREDAI National statement on

Mr. Satish Magar, President, CREDAI National statement on RBI’s announcement today

We expected more stringent measures from the RBI booster to revive the economy. Real Estate sector can act as a catalyst in resurrecting the economy, backed by stringent fiscal and non-fiscal measures. The move of moratorium extension is a short term piecemeal solution to a long term problem. 

The interest rate should be reduced with firm liquidity measures as this is the   need of the hour backed by one -time restructuring of loans to help the real estate sector from crumpling. RBI has tried to ease the pressure on borrowers and has extended group exposure limit for lenders to corporates from 25% to 30 % but this is not enough to solve the ongoing liquidity crisis. 

Government now needs to ensure that banks are forthcoming and are passing on the benefits to us currently, there is a dearth of income in the sector owing to the COVID crisis. Real estate industry remains the second largest employer after agriculture and prolonged slowdown in the sector will have a direct impact on  survival of 269 allied industries hence, it is critical for the Government  and RBI to take immediate measures  to  provide economic relief.

Views of Mr. R K Gurumurthy, Head - Treasury

Views of Mr. R K Gurumurthy, Head - Treasury, Lakshmi Vilas Bank 

on the RBI announcement today

“RBI announces a surprise 40 basis Repo Rate cut, taking the official rate now to 4.0% and at 3.35%, the Reverse Repo rate is at its lowest. Demonstrating remarkable nimbleness and responding to the evolving crisis due to extended lock down, the cut in rates and other attendant measures should address the demand side by boosting consumption and disincentive savings. While expectations of further rate cuts of atleast 75 basis during the FY was rife, the timing and guidance will have a telling effect on rate transmission and buttressing supply side measures

After the series of announcements last week primarily as an economic rescue package to thwart the deleterious effects on growth, today’s rate cut is more a front loaded monetary measure in an environment where inflation is likely to remain low. Measures like extension of moratorium by another 3 months, increase in single exposure by 5 percentage points to 30%, extension of 150b rupee line to EXIM for swap facilities and export credit tenor increase by 3 months will support the small and large sectors of the economy, alike. 

Market Impact:  Bonds have rallied in response to this unexpected announcement.  Some profit taking and the overbearing caution that RBI continues to be vigilant and battle ready, would induce an element of volatility in prices. Given the uncertainties ahead on both growth and need for further monetary and fiscal support, markets may start expecting some special dispensation on HTM holdings of Government Securities”

Views of Mr. R.K.Gurumurthy, Head – Treasury,

Views of Mr. R.K.Gurumurthy, Head – Treasury, Lakshmi Vilas Bank on the RBI announcement today

“Continuing from where it left, the v.2 of additional monetary support from RBI to address the COVID-19 economic collapse, came with a specific objective of channelizing liquidity to credit oriented schemes. RBI has assured continuation with super-easy liquidity and softer rates policy to ease financial stress.

Reverse Repo rate has been cut by 25 basis so that the corridor now becomes 90 basis. The system has roughly 7 trillion of excess liquidity that are parked at RBI's reverse repo window. Today's cut is a disincentive to overnight investments and should find way into credit. Additional TLTRO of 50,000 Cr has been announced and is likely to continue. LCR requirement has been lowered to 80% until October 2020 - thereby releasing the pressure for banks to divert a larger part of their investments in HQLA.

Measures towards further relaxing NPA recognition norms and additional refinance facility to NABARD etc will help in deferring NPA recognition and also help rate transmission better. 

In recent times, yields on GSecs have hardened leading to sharp increase in the borrowing costs of several state governments. The spread over overnight repo is close to historic highs and therefore warranted strong action. The relaxation in WMA guidelines would go some distance towards addressing this.”