FICCI statement on RBI Monetary Policy

Feb 05, 2021

NEW DELHI, 05 February 2021: Commenting on the monetary policy announcement Mr Uday Shankar, President, FICCI said, "The direction of the policy statement is positive. It is reassuring to note that the RBI continues with its accommodative stance to accelerate economic growth.  The recovery signs are getting stronger and the guidance provided by the Central Bank reflects its commitment towards supporting growth."

"We are encouraged to note the support offered by the Reserve Bank of India through the broad mix of regulatory measures today. The assurance and the clear communication by the Governor with regard to liquidity management and the government borrowing programme infuses optimism. The Central Bank is seen using all available policy tools to keep the liquidity at optimum levels. While CRR rates have been elbowed towards gradual normalization, the MSF relaxation and SLR holdings in HTM category have been extended," added Mr Shankar.

"We see that both the Government and the Central Bank are moving in tandem - which is the need of the hour. The innovative measures and reformist approach to meet the borrowings programme of the government is indeed laudable," said Mr Shankar.

"We are particularly happy to note the inclusion of NBFCs in the TLTRO on tap scheme for specified stressed sectors. NBFCs have emerged as a major source of organized lending especially for the MSMEs and play a vital role. However, we have noted that banks continue to favor high rated NBFCs and this distortion needs to be corrected to ensure a broad-based outreach," added Mr Shankar.

"Also, the incentivisation of new credit flow to the micro, small, and medium enterprise (MSME) borrowers is a big positive and indicates the targeted approach towards meeting the needs of the most stressed. MSMEs have been reeling under tremendous pressure and this measure should further nudge the banks to lend to these enterprises," Mr Shankar said.

"Allowing of retail investors to open gilt accounts with the Reserve Bank marks a huge structural change and places India amid few selected countries with a similar facility giving this category of investor an opportunity to participate in GILT market directly," added Mr Shankar.