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Macro impact of pandemic more severe than anticipated: Das

The governor also painted a bleak picture of the economic growth .

ET Bureau|
Last Updated: May 23, 2020, 09.47 AM IST
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Agencies
Shaktikanta Das
These requests have so far not been entertained by the regulator.
Mumbai: In his third address since India was forced to go into a lockdown, Reserve Bank of India Governor Shaktikanta Das announced extension of moratorium on loans and asset classification standstill on stressed loans by another three months till August 31. The announcement, which came 10 days before the earlier May 31 deadline, almost allowed accumulation of interest payments on working capital loans, payable in a staggered manner between September and March 2021.

The governor also painted a bleak picture of the economic growth indicating that these actions announced were quite warranted.

“The MPC is of the view that the macroeconomic impact of the pandemic is turning out to be more severe than initially anticipated, and various sectors of the economy are experiencing acute stress,” Das said in a video-link address. “The impact of the shock has been compounded by the interaction of supply disruptions and demand compression.”

Among its other measures, the regulator also rolled over the 15,000-crore Sidbi refinance facility by another 90-days, another 15,000-crore credit line was made available to Exim Bank to meet import-export credit demands while the group exposure limits were relaxed to 30%.

“The latest round of rate cuts, moratorium extension, deferment of interest on working capital facilities and relaxation in asset classification will provide the requisite balm to the economy,” said Zarin Daruwala, CEO (India), Standard Chartered Bank. “The support shown to Exim Bank, Sidbi and to importers/exporters will also help boost sentiment.”

Though in their wish-list to the RBI, lenders had also asked for a one-time restructuring of all loans, restructuring of overdue loans be considered standard loans, NPA classification extended to 180 days from the current 90 days and a special term-loan package be allowed for industries worst hit by the coronavirus-induced lockdown. These requests have so far not been entertained by the regulator.

“Our tendency has become that whatever has been given, just take it and ignore it and then start talking about what has not been done,” said Rajnish Kumar, chairman, SBI. “The moratorium takes care of the situation around cashflow disruptions and if someone needs after 31 August, a recast then whatever is the policy response or if there are any amendments to 7 June circular of RBI, or no amendments, banks will have to deal with the situation.”

The impact of the shock has been compounded by the interaction of supply disruptions and demand compression

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