RBI Governor Press Conference Highlights | RBI monitoring situation, will use all instruments to address COVID-19 challenge, says Shaktikanta Das

| From the perspective of regulatory norms to spur an economic revival, the measures announced aim to maintain adequate liquidity in the system, facilitate bank credit flow and ease financial stress. These are absolutely welcome, given that economic activity has come to a standstill during the lockdown. The RBI had earlier permitted extension by one year without asset classification downgrade, if DCCO was delayed for reasons beyond control of promoters. This relief is now also allowed for NBFCs; loans by NBFCs to commercial real estate will get the same relief. This move will positively impact NBFCs and real estate. The positive GDP growth forecast by IMF for India at 7.4% post Covid crisis is silver lining amidst dark terrain. Today’s overarching financial instrumental steps announced by RBI assured the constant monitoring of the daunting Human- Economic crisis. Today’s targeted liquidity transfusion measures aimed to improve the yield curve and incentivize banks to deploy more funding to the industry seems to be a kick-start step towards financial resilience: Niranjan Hiranandani,President – Assocham and NAREDCO

| TLTRO 2.0 to pump in additional Rs 50,000 Cr, which was much needed liquidity for NBFC and MFIs across and large and mid-sized firms. This should result in more transmission of funding to the corporate sectors. Additionally, all Standard assets as on March 1, 2020 shall exclude the moratorium period for NPA classification. Hence, there would be a standstill of all such accounts from 3 months period, which was a much needed clarification that was awaited. The market should consider this favorably at this will ease liquidity and credit classifications issues: Rajosik Banerjee, Partner and Head - Financial Risk Management, KPMG in India

, MD & CEO, HDFC Securities said the RBI 's efforts are three pronged.
- Push Banks to do more lending (by cutting reverse repo rate), providing more liquidity to them (higher TLTRO-2 funds, special refinance facility of Rs.15000 cr to SIDBI and prescribing lower liquidity coverage ratio) and prescribing some reliefs and some fresh moves to create provisions against slippages.
- Provide more credit to NBFCs (especially smaller ones) by prescribing that atleast 50% of funds under TLTRO-2 must be on lend to such entities. The special refinance facilities of Rs.10000 cr to NHB will help housing finance companies avail more liquidity. Also NBFCs can grant relaxed NPA classification to their borrowers and NBFCs can extend realty loans by 1 year if projects delayed on reasons beyond control.
- Alleviate the woes faced by State Govts by increasing by 60% the States Ways & Means Advances (WMA) limit to provide greater comfort to states.
He added that NBFCs are clear beneficiaries of these measures. For investors in Banks the provision of higher liquidity and relaxation in provisioning norms are welcome, but the bar on dividend distribution and new provisioning norms are negatives for the time being. While the RBI is doing its part in providing reliefs in the current times, the street could keep expecting more and there could also be some concern about the time it would take for these measures to have an impact at the ground level.

| We are extremely delighted and find a great sense of reassurance with the central bank taking cognizance of specific problems faced by real estate sector and proactively taking targeted measures to address those issues. The measures taken for liquidity support to NBFCs, HFCs and MFIs will meaningfully help the cause of the real estate sector. The move on reduction of reverse repo rate by 25 basis points shall push banks to open up the credit flow to economic activities. Similarly, allowing a 90 day extension for asset classification to loans that have been granted moratorium window is a critical step to assuage credit quality concern of lenders. Considering the lockdown and the impact on migrant labour workforce, there will be an inevitable delay in construction activity in real estate projects. Taking note of the situation, the central bank has provided one year project completion extension on asset classification for NBFC loans to CRE segment. Considering NBFCs have been very active in this segment, this announcement will ease the pressure of this segment too: Shishir Baijal, Chairman & Managing Director, Knight Frank India

| RBI has provided supplementary measures to address financial market liquidity, NPA recognition and operational concerns. Key measures which are likely to have a positive impact are a reverse repo cut, additional targeted LTRO for NBFCs and additional funds for HFC. This along with relaxation in NPA classification norms is likely to sooth markets. We also expect RBI and government to bring in a COVID bond or monetize central government deficits. This could happen down the line. RBI's whatever it takes stance is encouraging. Market off highs is largely due to volatility: Sahil Kapoor, Chief Market Strategist at Edelweiss Broking

| Highly anticipated liquidity measures announced to support NBFCs, HFCs, MFIs, Co-operative Banks and RRB’s through refinancing available from NABARD, SIDBI and NHB and also access to TLTRO 2.0 to be made available by Banks. A welcome immediate relief not only to these Institutions but also to their borrower base. Further, standstill on NPA classification on standard overdue accounts, as on February 29, which will avail moratorium will be a huge relief to such borrowers. However, these accounts will attract 10 percent provision which will block Bank’s capital against existing credit and hence, will not be available for new credit. Banks will need to do a balancing act between extending moratorium and providing new credit due to this provisioning requirement: Sanjay Doshi, Leader – Financial Services Advisory, KPMG in India

| RBI’s latest announcements to infuse liquidity and expand bank credit are expected to provide big relief to the NFBC sector as 50 percent of the proposed TLTRO worth Rs 50,000 crore will be invested in small and mid-sized NBFCs and MFIs. The Central Bank has also relaxed NPA recognition norms for NBFCs. Banks would also get relaxation on Special mentioned a/c, which are unpaid with 60-90 days as on March, but have to make 10 percent provisioning against such standstill accounts: Sundar Sanmukhani, Head of Fundamental research desk at Choice Broking

Find out what are TLTROs, what are banks' obligations under TLTRO and what happens if a bank fails to deploy funds availed under the TLTRO scheme.... Read More

| Another cut in reverse repo is intended to disincentivise banks from parking funds with the RBI and to incentivise them to lend to the real economy instead. Combination of measures to boost liquidity, improve monetary transmission and relax repayment schedules is the need of the hour in which RBI has been proactive and repeatedly insisting that they would do whatever it takes. Of course this provides much needed liquidity and positive message for NBFC especially and a much elaborated stimulus package is awaited: Abhishek Goenka, Founder & CEO, IFA Global

| RBI’s big bang stimulus was not a bazooka afterall, given the expectations, rather it was a conservative approach and indicated a piecemeal manner of infusing liquidity. The measures though significant were not substantial enough as a mere Rs 50,000 crore in the form of TLTRO is rather conservative. However, for the moment major concerns have been addressed as real estate and NBFC sectors have received massive relief, NBFCs (small and large) have liquidity coming in from TLTRO 2.0, financial institutions like SIDBI, NABARD and NHB have received liquidity directly from the RBI and there is relief on the NPA recognition and stressed asset reclassification for Banks. To add to it, a 25 bps reduction in the fixed reverse repo rate will enable banks to lend further and improve liquidity in the system. This has definitely boosted investor confidence as the quarterly numbers to be published by corporates will no longer be a horror story. Additionally, RBI’s openness of providing further relief if the situation worsens further is a big relief in these distressed times: Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote

| RBI’s big bang stimulus was not a bazooka afterall, given the expectations, rather it was a conservative approach and indicated a piecemeal manner of infusing liquidity. The measures though significant were not substantial enough as a mere Rs 50,000 crore in the form of TLTRO is rather conservative. However, for the moment major concerns have been addressed as real estate and NBFC sectors have received massive relief, NBFCs (small and large) have liquidity coming in from TLTRO 2.0, financial institutions like SIDBI, NABARD and NHB have received liquidity directly from the RBI and there is relief on the NPA recognition and stressed asset reclassification for Banks. To add to it, a 25 bps reduction in the fixed reverse repo rate will enable banks to lend further and improve liquidity in the system. This has definitely boosted investor confidence as the quarterly numbers to be published by corporates will no longer be a horror story. Additionally, RBI’s openness of providing further relief if the situation worsens further is a big relief in these distressed times: Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote

WMA is a temporary liquidity arrangement with the central bank, which enables the Centre and states to borrow money up to 90 days from the RBI to tide over their liquidity mismatch.... Read More

| LTRO is going to help the bond markets and thus the NBFCs. Even corporates are in the market to borrow money. We will need more measures going forward. Cash inflows are 5 percent of normal but outflows are 40-50 percent of normal: Rashesh Shah, CEO, Edelweiss Group told CNBC-TV18