RBI’s moves nuanced, address both economic and public health concerns: Bankers

MUMBAI: Bankers on Wednesday welcomed the measures announced by RBI as a nuanced attempt to address not just economic concerns but public health issues as well.

SBI Chairman Dinesh Kumar Khara said the unscheduled statement from Governor Shaktikanta Das has targeted moves to alleviate the troubles faced by multiple sectors.

“…the series of measures announced today reflect a novel approach. The decision to create a dedicated Rs 50,000 crore fund for ramping up Covid related healthcare infrastructure reflects RBI’s commitment to transcend boundaries by addressing not only economic health but also public health,” he said in a statement.

He also appreciated the decision to augment the lending firepower of small finance banks (SFBs) through priority sector tag, restructuring framework for individuals and small businesses, cash reserve ratio flexibility for lending to SMEs and the measures to help the state governments through ways and means advances relaxations.

MFIN, a self-regulatory organisation of micro-lenders, was very appreciative of the attempt to infuse liquidity for small MFIs by classifying and recognising SFBs’ lending to smaller NBFC-MFIs as priority sector lending.

The body’s chief executive Alok Misra said Das had met sector representatives looking at the “severity of the situation” and followed it up with the steps on Wednesday.

From the non-bank lenders, Mahindra Finance‘s Managing Director and Vice Chairman Ramesh Iyer said the measures aimed at individuals, small businesses and micro borrowers are a timely move, and welcomed the restructuring proposals.

“It’s (restructuring) an important announcement looking at the present economic landscape, this will provide as an impetus for businesses to recover from COVID-19 pandemic blues,” he said, adding that the moves to rationalise certain components of the extant KYC (know your customer) norms will support financial institutions to operate in a more efficient way.

Paul K Thomas, who heads the ESAF Small Finance Bank, said the RBI’s core focus on small lending and the last-mile delivery of credit to individuals and small businesses and the schemes to boost the provision of immediate liquidity to SFBs will go a long way in expediting economic recovery.

SFBs will now be permitted to give fresh lending to smaller micro-finance institutions (MFIs) with asset size of up to Rs 500 crore for on-lending to individual borrowers as priority sector lending.

This will add impetus to the SFBs who have been consistently playing a prominent role by acting as a conduit for the last-mile delivery of credit to individuals and small businesses, he said.

Private sector lender Kotak Mahindra Bank’s Group President for Consumer Banking, Shanti Ekambaram said the RBI has announced some timely liquidity measures that will provide relief to the most vulnerable by ensuring credit flow to individuals and small businesses and also give them greater repayment flexibility.

Viral Sheth, finance controller at Moneyboxx Finance, said several states with a huge rural population like Uttar Pradesh, Bihar and West Bengal are witnessing sharp rise in new cases and it was imperative to provide a helping hand to vulnerable sections of individuals and small businesses.

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