The Reserve Bank’s rate cut of 75bps will bring down the cost of borrowing and the CRR cut of 100bps will help in infusing the desired liquidity requirement in the system, corporates and industry associations have said.
The three-month moratorium on EMIs will reduce the repayment pressure on the borrower during this crisis period, they felt.
“All in all, it is a very welcoming policy. The government has announced corrective measures to combat the current pandemic situation which would help in bringing financial stability into the system.” Umesh Revankar, MD & CEO, Shriram Transport Finance.
Welcoming the slew of measures announced by the RBI, Sangita Reddy, president, FICCI, said, “This has been a very comprehensive set of announcements and highlights action in all the key areas that were expected.”
Extremely fragile
“The current situation in the economy and financial markets is extremely fragile. It required a massive dose of monetary stimulus to be injected at the earliest and the RBI has done just that.”
Commenting on the rate cut Chandrajit Banerjee, Director General, CII, said the substantial reduction in the CRR will help banks to reduce their lending rates and aid monetary transmission.
He said given that the current lockdown is expected to have a negative impact on the cash flows of firms, the moratorium on repayments of term loans for a period of 3 months will help companies tide over this period.
Murthy Nagarajan, head, Fixed Income, Tata Asset Management, said: “This is the RBI response to the adverse macro economic situation due to coronavirus. The RBI Governor has promised more conventional and unconventional measures, in the coming days. This may see RBI cutting rates further by 50 to 75 basis points in the current financial year,”
Gautam Hari Singhania, CMD, Raymond Ltd., said, “The moves announced by the RBI are decisive and a comprehensive package to ensure stability of financial markets.”
D.K. Aggarwal, president, PHD Chamber of Commerce and Industry, said, “These measures will provide adequate liquidity in the system, bring down the cost of capital and mitigate the impact of pandemic COVID-19.”
Rajiv Agarwal, MD & CEO, Essar Ports, said, “RBI’s move to reduce interest rates and infuse liquidity is a welcome move. More steps might be needed once the government comes out with the much-needed stimulus package to overcome the economic crisis arising from COVID 19.”
Published - March 27, 2020 10:38 pm IST
