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Friday, 07 Feb 2020
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Innovative move to boost growth; help stressed sectors, sans policy rate cut - Niranjan Hiranandani


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, Dr Niranjan Hiranandani, President, ASSOCHAM said.
''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 President ASSOCHAM. Besides the policy document makes it amply clear that the RBI would 'continue with the accommodative stance as long as it is necessary to revive growth' highlighting the commitment of the central bank to revive further economic activity.
The linkage of the external benchmarking for lending to 'Medium' scale enterprises along with liberal criteria for restructuring of the bank loans to the MSMEs would be great positives for boosting sentiment across the economy. The window for one-time restructuring of advances to the MSMEs till December 31, 2020 would be a relief not only to the critical sectors, but would also 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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