New Delhi, May 23, 2020: Since the lockdown period has been extended, the relief measures must adapt accordingly. The RBI announcement is a welcome move to ease the short-term financial burden for all citizens of India and help maintain liquidity as the economy recovers. The measures outline plans to improve functioning of markets, increase investments by FPIs by voluntary retention route, support exports and imports, and allow extension of measures to ease financial stress. The fiscal, monetary and administrative measures will create conditions that will enable a gradual economic revival as we ease out of the lockdown.
The further repo rate cut of 40 basis points to 4% is a positive move, but the transmission of these rate cuts must be implemented with immediate effect to effectively bolster the economy. The reverse repo rate cut to 3.35% ensures banks are incentivised to lend to productive sectors instead of passively depositing funds. The extension of the moratorium on term loan repayments for another 3 months will be especially helpful for businesses with stretched financials due to the lockdown.
Overall, the accommodative policy stance taken by the central bank will boost market sentiment and lend confidence to the financial system.
Corporate Comm India (CCI Newswire)
