NEW DELHI: With the Reserve Bank of India (RBI) admitting that GDP growth for the current fiscal will be in the negative territory, India Inc feels that the Friday’s measures might improve liquidity, address the stress due to cash flow disruption for businesses, and reduce borrowing costs reviving demand to some extent, but they aren’t enough.
“The central bank has once again proactively intervened with a bouquet of prudent steps to provide an impetus to growth, but it should also consider extension of moratorium for NBFCs for their repayment to banks, without which the NBFCs sector is facing acute distress,” said Chandrajit Banerjee, director general, Confederation of Indian Industry.
“Increase in group exposure limit to 30 per cent is a welcome move, may help banks meet the borrowing requirements of the private sector,” Banerjee said.The RBI frontloaded its rate action after it slashed interest rates by 115 basis points in a span of two months. “The benchmark repo rate was cut by 40 basis points to 4 per cent, the lowest since the benchmark came into being in 2000,” Governor Shaktikanta Das said. Earlier in March, the monetary policy committee had cut repo rate by 75 bps.
The RBI has also extended the moratorium on repayment of loans for three months. Society of Indian Automobile Manufacturers president Rajan Wadhera hopes that the banks passing on the rate cut benefits would revive demand. “We are hopeful that banks will pass on the benefit and support demand creation for discretionary products,” he said.
Other industry players said it remains to be seen if the bank credit offtake goes up, given the underlying heightened risk aversion among banks to lend.JLL India country head Ramesh Nair said faster transmission of these benefits in the form of lower home loan rates will aid in improving their effective affordability. “However, one-time restructuring of loans is the need of the hour; more importantly for the real estate sector,” he said.