“What is more welcome is the announcement that at least 50 per cent of this must go to mid- and small-sized NBFCs and MFIs. The special refinance facilities to NHB, SIDBI and NABARD would also play a constructive role,” said Niranjan Hiranandani, president of industry body Assocham.
SIDBI will come out with a product based on terms and conditions that come with the refinancing facility from RBI, said Mohammad Mustafa, its chairman and managing director. The refinancing will reduce the cost of funds for SIDBI as money will come at policy repo rate, which remains at 4.4 per cent and it will pass on the benefit in the form of lower in-lending rate, he added.
Industry insiders hope the impact of the measures would be felt soon. RBI has mandated that NBFCs have to invest the funds they receive within a month of availing the loan from RBI.
“The reverse repo rate cut by 25 bps from 4 per cent to 3.75 per cent is appreciable as it will make it unattractive for banks to passively deposit funds with the RBI and instead lend it to productive sectors. But we urge the government to provide an increased stimulus relief package of ~16 trillion, which is around 7 per cent of GDP (gross domestic product) sooner than later to mitigate the impact of Covid-19 on economy, trade and Industry,” said D K Aggarwal, president of the PHD Chamber of Commerce and Industry.
remain unhappy despite the latest measures. “The 90 days NPA norms to exclude moratorium or deferment period will give relief particularly to MSME
units. But we again stress that government should immediately announce a comprehensive economic package for the industry to provide relief in payment of wages, statutory obligations, rental and utilities,” said Sharad Kumar Saraf, president of the Federation of Indian Export Organisations.
Saddled with weak domestic demand and intense competition from major international rivals, exporters
have sought extension of pre and post-shipment credit tenure, interest-free loan to cover forward losses and enhancement of export benefits.
According to a report World Trade Organisation, quoted by the RBI Governor Shaktikanta Das, global trade is expected to decline up to 32 per cent in 2020. “With China recovering from the pandemic’s impact, it would flood global markets with essential supplies. India needs to have a specific strategy that should ride on empowering exporters to deal with this challenge,” said Ravi Sehgal, chairman of Engineering Exports Promotion Council India.
Meanwhile, the Apparel Export Promotion Council on Friday requested the central bank to protect exporters from penalty on forward covers due to exchange rate fluctuations. Exporters are concerned about sharp fluctuations in currency in the past few weeks and the resultant penalty that banks charge on cancellations and exchange rate differential charges for the period for which the forward cover was booked, AEPC Chairman A Sakthivel said in a letter to the RBI governor.