Bankers call RBI pause a prudent step, hail regulatory moves.
Mumbai: The status quo by the Reserve Bank was termed as a “prudent step” by the lending community, but measures on the regulatory front like restructuring and increase in lending against gold were welcomed.
Rajnish Kumar, chairman of SBI, who also heads the Indian Banks’ Association, said the outlook on growth “continues to be negative” and pointed out that the RBI has refrained from giving a number on the contraction of the economy, while inflation trajectory is “uncertain”.
“The decision to hold the policy rate is a prudent one in the prevailing circumstances as the trajectory of economic growth, inflation and external demand continues to remain uncertain,” Kumar said in a statement.
“The RBI has addressed the need to offer some form of restructuring facility for standard accounts that are facing difficulty in debt restructuring. We welcome the fact that a new Resolution Framework for COVID-19-related stress facility has been extended to large corporate, SME and personal loans with necessary safeguards in each segment,” he added.
Bank of India’s managing director and chief executive A K Das said the RBI policy has “several positive” measures which will help in financial stability, including additional liquidity of Rs 10,000 crore to the National Bank for Agriculture and Rural Development (NABARD) and the National Housing Bank (NHB) towards directed lending to NBFC and HFC, extension of timeline of MSME restructuring, and incentive scheme for priority sector lending.
Indian Bank’s managing director and chief executive Padmaja Chunduru termed the monetary policy committee’s call as “pragmatic” as the accommodative stance has been maintained.
Private sector lender Kotak Mahindra Bank’s group president Shanti Ekambaram welcomed the restructuring scheme for the MSME sector, saying it will provide additional relief to a sector deeply impacted by the COVID-19 pandemic.
Non-bank lender Shriram Transport Finance’s managing director and chief executive Umesh Revankar welcomed the move to end moratorium and instead go for a case specific restructuring.
Among the foreign lenders, Standard Chartered Bank’s Zarin Daruwala said the resolution framework should help reduce the strain on the balance sheets of corporates operating in affected sectors in a meaningful way and the revised priority sector lending norms should improve funds flow to credit-starved districts.
The Reserve Bank on Thursday said it will set up an ‘Innovation Hub’ in the country for ideation and incubation of new capabilities which can be leveraged to deepen financial inclusion and promote efficient banking services.
“The Innovation Hub will support, promote and hand-hold cross-thinking spanning regulatory remits and national boundaries,” RBI said in its ‘Statement on Developmental and Regulatory Policies’.
The Hub, it added, will act as a centre for ideation and incubation of new capabilities which can be leveraged to create innovative and viable financial products and/or services to help achieve the wider objectives of deepening financial inclusion, efficient banking services, business continuity in times of emergency, and strengthening consumer protection, among others.
Observing that the Reserve Bank has constantly endeavoured to encourage responsible innovation by entities in financial services sector, it said the central bank earlier took various initiatives for setting up Regulatory Sandbox.
The Regulatory Sandbox framework was one such recent initiative in which digital payments were the first cohort, RBI said, adding “six proposals were accepted under the Sandbox, the pilot studies/trials of which have been delayed on account of the present COVID-19 situation.” Regulatory sandbox (RS) usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain relaxations for the limited purpose of testing.