Amid an increase in localized lockdowns across the country, Reserve Bank governor Shaktikanta Das said on Wednesday that a moratorium on loan repayments was not needed at this time, saying businesses are better off. prepared to face the situation.
It can be noted that the RBI announced a six-month moratorium at the start of the national lockdown last year to help borrowers affected by the economic downturn. The entire state of Maharashtra is blocked for non-essential services and localized and overnight blockages are seen in many pockets of the country, including the nation’s capital, to limit the increase in cases.
Under current conditions, a moratorium is not necessary, Das said when interacting with reporters after the announcement of the first monetary policy review of the new fiscal year. He said that businesses, especially those in the private sector, are better prepared today to deal with the situation and continue to operate.
Das, however, added that he cannot give any indication of the future course of action to be taken by the RBI.
Referring to the moratoriums on term loans as a conventional instrument, which is akin to a standard operational tool, Das recalled that the RBI had taken a series of innovative measures over the past year to help the economy in the pandemic and pointed out that the purchase of structured bonds under the GSAP program announced earlier today is one such measure.
We regularly monitor asset quality data. Whatever the situation, a central bank should not react instinctively. And we won’t take it either. We will monitor a situation, its depth, severity and impact before making a decision, he said.
It can be noted that the moratorium on loans continued until August 2020 and was followed by a one-off restructuring for some accounts. The Supreme Court rejected an extension of the moratorium, asking banks to classify non-payments by borrowers after August according to standard standards.
The moratoriums helped limit stress on bank books, but lenders are expected to report an increase in non-performing assets (NPAs) reported in the March 2020 quarter after clarity provided by the Supreme Court.
According to one estimate, Maharashtra’s month-long lockdown will impact Rs 40,000 crore across all sectors.
Meanwhile, Das reiterated his comments made last week, expressing hope that the current rise in infections will not impact economic growth, stating that the factories are functional, that vaccination is underway. and that people are better prepared to deal with COVID-19 today. .
It can be noted that earlier today, the RBI maintained its estimate of real GDP growth of 10.5 percent in FY22, after contracting more than 7 percent in FY21.
Das acknowledged that some businesses like restaurants have been affected due to the new closures, but pointed out that Indian businesses have an innate ability to adapt and hotels have already started with alternatives like door-to-door deliveries to compensate. the setbacks.