March 27th, 2020

The moratorium on all term loans and relief on interest on working capital addresses the liquidity challenges and the new TLTRO provides for a Rs 1 lac crore facility where by banks availing of this have to in turn use that to invest in CP’s and other instruments (and will be classified as HTM), the liquidity for which has completely dried up.

All in all these are extremely positive measures and together with recent announcements add up to an injection ~ $ 50 bn of liquidity. More that anything else, the commentary from the Governor about “doing what it takes” echoes the comments from the policy makers globally.

Other regulatory adjustments and participation of select banks in the offshore NDF market are also extremely positive.

Although the health side of the epidemic relating to the containment of the virus will be extremely important, in these uncertain and challenging times, these measures are extremely welcome and should be viewed extremely positively. Moreover, we should have complete confidence that policy makers in India stand ready to act proactively, as required, to mitigate any adverse effects that may emerge over time.

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

Experts welcome RBI’s stimulus measures amid coronavirus pandemic
https://www.cnbctv18.com/finance/experts-welcome-rbis-stimulus-measures-amid-coronavirus-pandemic-5574111.htm

Counting On Hope, How Multiple Crises Have Failed To Break The Bank
https://www.outlookindia.com/magazine/story/business-news-the-banks-are-alright-sort-of/303017

Newsalert-gj-virus-cases
http://www.ptinews.com/pressrelease/40251_press-subSiddharth-Mehta–Founder-and-CIO–Bay-Capital-Gives-his-Opinion-on-RBI-s-Statement–Doing-Whatever-it-Takes-

Siddharth Mehta, Founder & CIO, Bay Capital on RBI’s Statement ‘Doing Whatever it Takes’

https://www.prnewswire.com/in/news-releases/siddharth-mehta-founder-and-cio-bay-capital-gives-his-opinion-on-rbi-s-statement-doing-whatever-it-takes–876920703.html

http://www.biznews.in/article/siddharth-mehta-founder-and-cio-bay-capital-gives-his-opinion-on-rbi-s-statement-doing-whatever-it-takes-

https://www.businesstoday.in/prnewswire/?rkey=20200327EN63600&filter=2418

http://indiannerve.com/in-press/?rkey=20200327EN63600&filter=6492

https://www.business-standard.com/article/pti-stories/siddharth-mehta-founder-and-cio-bay-capital-gives-his-opinion-on-rbi-s-statement-doing-whatever-it-takes-120032800257_1.html

http://www.estrade.in/siddharth-mehta-founder-cio-bay-capital-on-rbis-statement-doing-whatever-it-takes/

https://www.indiatoday.in/pr-newswire?rkey=20200327EN63600&filter=4315

https://www.indiainfoline.com/prnewswire?rkey=20200327EN63600&filter=4993

Posted by Siddharth Mehta, Founder & CIO