RBI re-opened its one-time loan restructuring plan for individuals, small businesses, MSMEsIn an unscheduled addresson Wednesday, May 5, Reserve Bank of India (RBI) Governor Shaktikanta Das announced several set of measures to tackle the economic disruptionsamid the second wave of the COVID-19 pandemic in the country.
The central bankwill provide term-liquidity supportof Rs50,000 crore to ease the access of funds for emergency medical services.
This comes at a time when the healthcare system is overburdened with surging coronavirus cases.
(Also Read:RBI Announces Term Liquidity Facility Of 50,000 Crore For Healthcare )The RBIalso re-opened its one-time loan restructuring plan for individuals, small businesses, and micro, small and medium enterprises (MSMEs) currentlyaffected by the state-wise lockdown restrictions.
The small borrowers having exposure up to Rs 25 crore, who did not avail of the restructuring earlier and where loans were classified as standard as of March 31, 2021, will now be eligible for loan restructuring in the second round.
(Also Read:RBI Says Loan Moratorium For Small Borrowers - See Who Qualifies)The Reserve Bank also relaxed KYC norms for customers and directed the regulated entities or banks not to impose any restrictions in case the account holders fail to update their KYCtill the end of the year.
The RBI also extended the scope of the video KYC or V-CIP for the new categories of customers includingproprietorship firms, authorised signatories, andbeneficial owners of legal entities.
(AlsoRead:RBI Relaxes KYC Norms Till End Of Year: Here's What Customers Should Know)Here's what analysts and experts have to say on the RBI's announcements today, as part of its measures to tackle the economic disruption:Mr.DhirajRelli,MD and CEO,HDFCSecurities:TheRBIGovernor's announcementdid not include blanket moratorium and hence some ofthese fears did not come out to be true and Banking stocks did not sell-off.
Small businesses and MSME borrowers have been given a chance to extendtheir payment schedules.
Rs.50000 crore term liquidity for healthcare sector is welcome but unlikely to benefit many listed players.
Overallthestreet may be disappointed withthefinancial impact oftheannouncement.''Dr.JosephThomas,HeadofResearch,EmkayWealthManagement:The three-year facility, which the banks can advance, to theofRs.
50,000 Crs, is a good measure to immediately help ramp up medical and healthcare facilities.
The benefitsofthis will help enhance capacity for the longer term as it covers diagnostic, preventive as well as combative aspectsofhealthcare.Omkar Shirhatti - Co-Founder and CEO -KarzaTechnologies:TherationalizationofKYCcompliancenorms announced byRBItoday was a much-needed move and is likely to impact the banking ecosystem in multiple ways.
The most significant impact we foresee is a relatively substantial reduction notjustin customer acquisition costs but also in operations andcompliancecosts.
A large chunkofoperational andcompliancecosts came from the regular updationofKYCinformation, something which may now be possible via mobile and internet banking by customers themselves, thus reducing those costs.From the customer perspective, businesses and commercial entities have had to go through paper-based account opening thus far.
With the change in norms, current account openings and MSME Lending can now be completely digital, giving small businesses easier access to banking facilities.
We also foresee an increase in Neo Banks and Digital SME Banks.Onthe whole, the new norms are a move in the right direction, enabling more thorough digitization and a secure banking ecosystem.Shekhar Bhandari, President Global Transaction Banking, Kotak Mahindra Bank:RBI's measures announced towards rationalisation of KYC norms, especially extending scope of V-CIP, will enable banks to step up customeronboarding, as also enhance customer experience.
Credit to MSMEs will increase given the relaxation announced for NDTL.Ms.BekxyKuriakose,HeadFixedIncome,PrincipalAssetManagement Company:''Consideringthebig bang measures undertakenbyRBIsince March 2020,today's measures are more of incremental specific targeted measures designed to provide relief where required.Forthedebt market,theannouncementof Rs 35,000 cr of OMO purchases under Gsap 1.0 or Government Securities Acquisition Programmewas a key positive which led tothe10-year benchmark gilt closing below six per centtoday.
While totally quantum under Gsap 1.0 has already been announced forthequarter April to June 2021, consideringRBI's reiterationtodaythat Policy would be channeled to targeting growth impulses market has takenannouncements positively.We expect inthenear term gilt prices to remain supported givenRBImeasures inthebackdrop of banking system liquidity and benign short-term money market rates.''Mr.
Nish Bhatt, Founder - CEO, Millwood Kane International - an investment consulting firm:The measures announced will support the funding requirements of the healthcare, medical facilities, beef-up vaccine manufacturing for domestic inoculation.
MSMEs and individuals borrowers will benefit from the extension in the moratorium.
The RBI's intent to take further measures if need be to provide relief, focus on the post-COVID future will send the right signal for the markets..Mr.VikashKhandelwal,CEO,EqaroSuretyPrivateLimited''Maintaining its stance of providing monetary support, theRBIGovernorannounced measures to support healthcare infrastructure, protecting the interests of small businesses, individual borrowers, and safeguarding the macro-economic fundamentals.
The step to categorize Small Finance Banks'on-lending to Micro Finance Institutions (MFIs) as priority sector lending will ensure liquidity for small businesses.''