‘Innovative Move To Boost Growth,’ Says ASSOCHAM President ON RBI POLICY

Press Release

The Reserve Bank of India (RBI) announced its sixth bi-monthly monetary policy statement for 2019-20 today in which the repo rate has been left unchanged. The Monetary Policy Committee (MPC), led by Governor Shaktikanta Das, said it has decided to keep the policy repo rate unchanged at 5.15%.

With its recent move, the RBI Credit Policy has given a boost to critical sectors such as automobiles, housing and MSMEs, besides infusing additional liquidity of Rs 1 lakh crore in the banking system. This is expected to reduce lending rates even though the policy rates have been left unchanged at 5.15 per cent, as per ASSOCHAM President Dr. Niranjan Hiranandani.

”While RBI has chosen innovative ways, like changing the REPO mechanism and liberal CRR (Cash Reserve Ratio) window to the  banks for fresh lending to housing and automobile sectors and the MSMEs, the assertion by Governor Mr Shaktikanta Das that policy space is still available with the central bank is re-assuring,” said ASSOCHAM President.

Besides the policy document makes it amply clear that the RBI would ‘continue with the accommodating stance as long as it is necessary to revive growth’ highlighting the commitment of the central bank to further revive economic activity.

The linkage of the external bench-marking for lending to ‘medium’ scale enterprises along with liberal criteria for restructuring of the bank loans to the MSMEs will be great for boosting sentiment across the economy. The window for one-time restructuring of advances to the MSMEs till December 31, 2020 will bring a relief not only to the critical sectors, but is also expected to help banks in repairing their own balance sheets.

Another highlight is the relaxation given to the commercial real estate sector.  RBI has decided to permit extension of date,for commencement of operations of project loans for commercial real estate, delayed for reasons beyond the control of promoters, by another one year. This would be done without downgrading the asset classification, in line with treatment accorded to other project loans for non-infrastructure sector.

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