MUMBAI: India Inc on Friday welcomed RBI’s liquidity boosting measures that included a cut in benchmark repo rate by 40 basis points, extension of moratorium on term loans and increase in group exposure limits for lenders.
A number of industry leaders, who spoke to Mint, maintained that the latest measures by the central bank will aid economic recovery by fuelling demand that had been severely hit by covid 19 outbreak.
“This affordable credit coupled with moratorium extension will help restart the economic engine," said Bhavesh Gupta, CEO, Clix Capital, a non-banking finance company (NBFC) which mainly focuses on retail and small business loans. “Repo and reverse repo rate to multi-year low rates will give the much needed liquidity boost to consumers and micro, small and medium enterprises (MSMEs)," Gupta added.
The RBI governor's assessment of the economy is perhaps closer to the ground reality. This is the right time for the government to start rolling out Infra spending, said Rajiv Agarwal, MD & CEO, Essar Ports. "Also sectors such as defence and other central services can place orders to kick-start the auto sector for instance. This will help spur consumption," he added.
The government must roll out a minimum of 10% of the GDP as economic packages for sectors that have suffered the most, relax regulatory reforms further, increase private equity by making India in terms of tax and investment climate safer and friendly, said Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Limited. “Privatise, monetise and stabilise the economy. Land, labour, ease & cost of doing business should be given high preferences," Dutt said.
“Need of the hour is for the central bank to announce measures encouraging friction-free & urgent infusion of liquidity to borrowers from Banks & NBFCs," said Nitin Mittal, founder and CEO, SOLV, a B2B platform that helps connect SMEs with investors.
RBI’s acknowledgement of the severe economic stress also led to many in India Inc seeking more relief measures.
“Today’s RBI announcement should be an eye opener for everyone. A quasi-government organization has for the first time accepted that the GDP growth would be negative and that the economy is facing major problems on the demand side," Sanjay Sabharwal, managing director of Jamshedpur-based Metaldyne Industries Ltd, a supplier of metal parts to major automakers. There is more room for policy measures such as reducing the Goods and Services Tax (GST) rates, he added.
RBI's measures will definitely encourage consumers to borrow more from banks, said Anshuman Magazine, chairman & CEO - India, South East Asia, Middle East & Africa, CBRE. "We welcome these announcements as they are directed towards infusing liquidity and strengthening consumption, thereby giving a push to economic recovery," he said.
The central bank’s move to make loans cheaper has also made buying homes more attractive for first time buyers and investors, he added.