Bay’s Founder & CIO views on RBI’s step to boost economy

April 17th, 2020

The set of measures from the RBI today are in continuation of its objective of doing what it takes to ensure financial stability and adequate lubrication of the financial system.

The specific announcements are very positive and continue to address a broad range of issues. The reduction in reverse repo will nudge banks to take some incremental risk and lend onward to the financial system.

The stand still announcement to exclude the moratorium period in the asset classification norms will provide a relief to the system although there is a provision of 10% that needs to be maintained. Additional steps such as the increase in WMA limits for states and special refinancing facilities of Rs 50,0000 cores to NABARD, SIDBI and NHB are also positive. Further steps to address the problems in the real estate sector will be viewed positively.

Though there are still some additional problem areas that will need to be addressed, all in all, these measures are extremely welcome and should be seen as one more step in a series of measures. Even as the RBI continues to do all it can within its purview, all eyes are now on the Finance Minister to step up immediately and provide a further set of fiscal measures which are indeed the need of the hour.

Excerpts from the article by Siddharth Mehta have been covered here :-

Posted by Siddharth Mehta, Founder & CIO