The Indian Chamber of Commerce and Industry, Coimbatore, on behalf of trade and industry of this region, welcomed the announcement of the RBI and thanked the Governor of the Reserve Bank of India for making these administrative measures which they felt would certainly create conditions conducive for the revival of economic activities of the nation.
Coimbatore: On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) has decided to:
• Reduce the policy Repo Rate under the liquidity adjustment facility (LAF) by 40 bps to 4.0% from 4.40% with immediate effect.
• Due to this, the Marginal Standing Facility (MSF) rate and the Bank Rate stand reduced at 4.25% down from 4.65%.
• The Reverse Repo Rate stands reduced at 3.35% down from 3.75%.
• The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target.
The Indian Chamber of Commerce and Industry, Coimbatore, on behalf of trade and industry of this region, welcomed the announcement of the RBI and thanked the Governor of the Reserve Bank of India for making these administrative measures which they felt would certainly create conditions conducive for the revival of economic activities of the nation. The Monetary Policy Statement 2020-2021 was announced by the Reserve Bank of India on May 22, 2020.
Further they welcomed the decision of increasing the export credit period from 1 year to 15 months. They also welcomed the extension of the moratorium calling it a 'welcome step' that will bring in some relief to the borrowers, but can put pressure on the banks. The RBI has taken a calibrated approach to save the economy rather than favouring banks, they noted.
The ICCI also said that this would provide solace to the ailing economy and also bring some relief for corporate borrowers. Borrowing costs are likely to come down with the Reserve Bank of India resuming the process of monetary easing by lowering the Repo Rate by 40 bps in line with market expectations and ensuring easy liquidity for banks.
By cutting the Repo Rate and Reserve Repo Rate, RBI aims to inject more liquidity and what is needed is to remove the risk averseness as there is substantial liquidity in the banking sector.
The Chamber concurs with the RBI Governor who said that the downside risks to this assessment on fiscal and administrative measures are significant and contingent upon the containment of the pandemic and quick phasing out of social distancing and lockdown.