The central bank’s moves to provide on-tap liquidity window for contact-intensive sectors and special liquidity facility to SIDBI have been welcomed
NEW DELHI :
India Inc on Friday hailed the central bank’s move to provide on-tap liquidity window for contact-intensive sectors worth ₹15,000 crore and special liquidity facility to SIDBI worth ₹16,000 crore at a time such sectors have borne the brunt of the state-wide lockdowns during the ongoing second wave of the pandemic.
In its latest monetary policy review, the Reserve Bank of India (RBI) on Friday said in order to mitigate the adverse impact of the second wave of the pandemic on certain contact-intensive sectors, a separate liquidity window of ₹15,000 crore has been opened till 31 March 2022. Under the scheme, banks can provide fresh lending support to hotels and restaurants; tourism—travel agents, tour operators and adventure/heritage facilities; aviation ancillary services—ground handling and supply chain; and other services that include private bus operators, car repair services, rent-a-car service providers, event/conference organizers, spa clinics, and beauty parlours/saloons.
Chandrajit Banerjee, director general at Confederation of Indian Industry said that while keeping the policy rates unchanged, RBI’s move to continue to use its unconventional tools to keep yields stable amid a large government borrowing programme provides succour to keep the borrowing costs contained for the private sector. “In addition, measures such as provision of on-tap liquidity window worth ₹15,000 crore for contact-intensive sectors, special liquidity facility to SIDBI for on-lending and refinancing, and expanding coverage of borrowers under Resolution Framework 2.0 are all expected to provide relief to the beleaguered sectors," he added.
Sanjay Aggarwal, president, PHD Chamber of Commerce and Industry, said announcements such as special liquidity facility of ₹16,000 crore to SIDBI for on-lending to micro, small and medium enterprises to further support their funding requirements, and enhancement of exposure thresholds limit from ₹25 crore to ₹50 crore for the Resolution Framework 2.0, will enhance the credit flow to MSME sector, non-MSMEs, small businesses, and individuals, which is required at this extremely crucial juncture. “We look forward to possible repo rate cut in future as cost of funds has to come down in coming times. We expect continuation of accommodative policy stance as depressed demand has to be rejuvenated with enhanced liquidity for businesses and people," he added.
ASSOCHAM secretary general Deepak Sood said the decision of the RBI Monetary Policy Committee to stay on course with the accommodative stance with a focus on the "equitable distribution" of liquidity sends an important message from the central bank to be reaching out to those affected the most by covid-19 pandemic, through increased and wider windows for soft lendings. “'RBI has been stellar in its performance right through this pandemic crisis with the result that all participants of the financial markets—stocks, bonds, banks, forex—have shown a great amount of resilience and adaptability to the ever-changing situation. Its coordination with the government has been excellent with the result that the fiscal and monetary arms of the system are in perfect sync to face the storm," he added.