The other signals expected from the policy related to the rollback of measures announced during the pandemic. The two areas of interest are the cash reserve ratio (CRR) cut, which was to be till March 31, 2021 and the other to the series of liquidity enhancing measures which were very gradually rolled back in the last couple of policies, especially those on long-term refinancing option (LTRO) being redeemed earlier.
On liquidity, there is assurance that it will be provided in adequate quantities and that the market perception of a rollback was not founded on any strong basis. Therefore, we can expect further such action from RBI to also fully facilitate government borrowing in FY22. In fact, the RBI has stated that the CRR will be lowered in two phases on March 27 and May 22, which in effect, will open the doors for other liquidity enhancing measures by the RBI. This is something which the market will be watching for.
On the measures for the financial system extension of TLTRO to NBFC through the on-tap route is significant as this was a long-standing demand. NBFCs provide a very important last mile connectivity to the borrower. This will be useful for this segment and help in channeling of funds to the final beneficiaries. This is also a segment that required support given the developments in the last couple of years.
An interesting measure is to give retail access directly to the market. While it is quite unique the participation will depend on understanding of how these bonds work and also the ability to operate in the secondary market successfully. This has been a problem in the corporate bond market too, and hence the structures would be keenly awaited.
Quite clearly the tone has been set for the next year, which will be stable to a large extent, unless there is a serious economic shock.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.