Mixed reactions to RBI announcement

Chennai: The Consortium of Indian Associations (CIA) has expressed disappointment over RBI’s Wednesday announcements.

According to CIA convener K E Raghunathan, “The benefits of the announcements – the Resolution Framework 2.0 for COVID Related Stressed Assets of Individuals, Small Businesses and MSMEs, Lending by Small Finance Banks (SFBs) to MFIs for on-lending to be classified as Priority Sector Lending, Credit to MSME Entrepreneurs, Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs) will not benefit the MSMEs and self employed who are badly affected by Covid 1 and Covid 2 and are having cash flow issues and bleak unpredictable future.”

He added: “The alternative to moratorium through loan restructuring for accounts which are ‘standard’ as on March 31, 2021, will deprive many self employed and micro/small enterprises to avail this benefit.”

Stating that many industries are left out, he added, what is required is emergency relief, not announcements of restructuring which are time consuming and will lead to chaotic implementation.

Dr Vidya Mahambare professor of Economics, Great Lakes Institute of Management, Chennai said, “RBI’s liquidity enhancing measures are aimed at encouraging banks to lend to targeted sectors such as healthcare and small borrowers. With sufficient liquidity already available with banks it is not clear as to why the flow of funds to these sectors would increase with minor incentives. The extension of availing the loan restructuring for SMEs is a welcome step. Also announced was the next round of purchases of outstanding government securities by the RBI later this month which should lower the pressure on G-sec yield and thus on the lending rates in general.”

 

NT Bureau