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Reserve Bank of India (RBI) announced on 5th of May a number of economic measures to tackle the second wave of Corona that is grappling India presently. RBI Governor Shaktikanta Das has said that a comprehensive targeted policy is required to tackle the crisis. Asserting that he has faith in India’s ability to come out of Corona crisis, Das said that RBI is analysing the impact of Corona second wave impact on Indian Economy.
The relief measured from RBI include the following -
- RBI has permitted use of limited KYC to till December 1, 2021.
- It has re-opened one-time restructuring for individuals and MSMEs.
- As part of restructuring 1.0, the period of moratorium can be extended up to a total of 2 years.
- Small finance banks are allowed to on-lend to smaller microfinance institutions of asset size up to Rs 500 crore.
- Targeted long-term operation for small finance banks of up to Rs 10,000 crore.
- RBI has also permitted state governments to remain in overdraft for a maximum of 50 days. Prior to the announcements, the tenure was 36 days.
- It has extended the number of consecutive overdraft days from existing 14 days to 21 days.
DQ Channels discussed this with the IT business community. They are not very confident of the positive outcome of these measures. Kshitij Kotak, CEO, Fortune Grecells said, "Moratorium is like cardiac surgery on 90 year old patient, some may not survive the cure. If the surgery does not kill them, anaesthesia will. Companies may collapse with compounding nature of restructuring. What is needed is real relief, equity participation and crowdfunding. Economists have to think outside of the box (not, out of the box). Banks, government institutions, local government, taxation, utilities; hardcore relief is needed. We are paying full salaries to all our colleagues. This is our small contribution in making sure they can continue to spend & if people have money to spend , consumption, economy will stay afloat. Not sure how long anyone can sustain."
"Policy on paper is really good, but it is time for government to ensure that money is in people's hands to spend. If we can ensure money in hands of our staff & associates, government needs to lower burden on businesses. RBI can do better than this."--Kshitij Kotak, CEO, Fortune Grecells
"This is hardly any relief. Should have announced interest waivers retrospectively since Covid began other than unconditional 50% enhancements of OD facilities for MSME at least."--Puneet Singhal, CEO, Pioneer Enterprises
"These reliefs are just an eye wash and no concrete relief. Can anyone say with certainty what has been proposed upfront for the entrepreneurs, except that we can defer our EMI payments but that too has not been confirmed with duration and dates. It’s like banks and government wants to have assurance of EMI payments by dangling deferment carrot."--Manoj Khanna, MD, Compucover East
The second wave of Corona has been devastating and the people no longer have money to spend. This is compounded by extended periods of lockdown, which seem to be never ending. Even if the lockdowns end, people just don't have the resources to support the economy anymore.
Hence, the business community is in a state of gloom and hence, they expect more from the government to help the economy.
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