PremiumMUMBAI : Corporate India, which was already battling the effects of a slowing economy before the Covid-19 outbreak brought most businesses to a grinding halt, has welcomed the Reserve Bank of India’s (RBI’s) move to allow a three-month moratorium on loans and a cut in the repo rate by 75 basis points. These steps are expected to help the domestic industry tide over the turbulent period, said senior company managers.
The measures announced by RBI governor Shaktikanta Das on Friday included a three-month moratorium on instalment payments on all term loans and interest on working capital loans.
“Given that the current lockdown is expected to have a negative impact on the cash flows of companies, the moratorium on repayments of term loans will help companies tide over this period," said Chandrajit Banerjee, director general, Confederation of Indian Industry. The repo rate cut, together with a host of other steps to boost liquidity, will address the financial stress in the system caused by the Covid-19 outbreak and the consequent lockdown, he said.
He said the moratorium period should be extended if the impact of the pandemic lasts longer than expected.
The steps will bring comfort to corporate India, but the government and the RBI should also look at sector specific relief packages, said Anirban Chakraborty, managing director and chief executive officer, Tourism Finance Corporation of India.
“We welcome RBI’s stance to support the economy amid these trying and uncertain times. The announcement brings much needed immediate relief to borrowers across sectors. We further expect additional special relief packages to be provided to the sectors worst affected such as aviation and tourism," he said.
The moves will be a relief to the realty sector, which has been struggling with high levels of unsold inventory.
“The 75 bps cut would give a big boost to demand for credit appetite among new home buyers to avail housing loan, resulting in growth of the real estate sector. The moratorium on term loans would provide relief for the real estate sector to focus more on the operational requirement and recalibrate the business strategies," said Kamal Khetan, chairman and managing director, Sunteck Realty Ltd.
