The other significant measure relates to restructuring of loans given to individuals, small business and small-and-medium enterprises (SMEs). As this segment gets affected more than the larger enterprises; the three levels of restructuring of loans for these categories into new and existing cases will benefit them for sure.
The measure to increase the maximum number of days a state can be in overdraft mode is very proactive as given that the lockdowns this time are regional and will affect the revenue flows of the state governments. Such facilities will offer more room to them when managing their fiscal balances.
The signal really given by the RBI
is that while it does believe today that things have not taken a turn for the worse as enterprises at all levels are better prepared than last year while facing lockdowns, there could be surprises on the infection side that can engineer various measures by states that can affect business. However, the RBI
will remain proactive and get in measures to address worries.
Presently the central bank does not feel there is need for any moratorium and the focus is hence more on making available funding for the healthcare sector in particular besides the SMEs. A payment crisis is definitely not seen presently. To that extent, there could be a rise in non-performing assets (NPAs), banks can make use of the counter-cyclical provisioning buffer.
Madan Sabnavis, is chief economist at CARE Ratings and author of: Hits & Misses: The Indian Banking Story. Views are personal
Disclaimer: Views expressed are personal. They do not reflect the view/s of Business Standard.
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