Bankers hail RBI’s accommodative policy, welcome G-SAP, TLTRO and PSL measures
A clear commitment to injecting liquidity through the G-Sec Acquisition Program (G-SAP) and other growth measures announced by the RBI on Wednesday led bankers to give the green light to the first policy review of the new budget. “RBI’s policy statement is a clear commitment to allay uncertainties in the market with guaranteed and ongoing liquidity support and explicit guidance for navigating through the current outbreak of COVID, the duration of which is uncertain,” said said SBI Chairman Dinesh Khara. Welcoming other measures such as co-lending with non-banks classified as priority sector loans, Khara called the policy statement one that leaves a “clear footprint on growth.” Industry Lobby Association of Indian Banks Chairman Raj Kiran Rai, who also heads the state-run Union Bank of India, said the guidelines for managing liquidity through purchases of Rs 1 lakh crore bonds under G-SAP are an important aspect for banks. Given the government’s huge borrowing program, the market expected an RBI forecast in this area. The policy has given enough comfort, ” he said in a statement. He said other measures such as expanding the Targeted Long-Term Repo Operations (TLTRO) program and additional funding to Indian financial institutions would also help banks. HDFC Bank chief economist, the largest private sector lender, Abheek Barua, said the policy is clearly focused on managing returns and G-SAP will stabilize and support long-term returns. He said the policy was “more accommodating than expected,” with the central bank acknowledging the risks associated with increasing cases of infection in the county and continuing to support growth. The head of the National Bank of the Punjab, SS Mallikariuna Rao, said the policy was in line with expectations with specific measures that would contribute to a faster economic recovery. “The policy announcement represents a balanced approach to deeply embed economic recovery, ensure orderly development of the financial market and keep price movement at manageable levels,” said the Managing Director and Managing Director of Bank of India, AK Das. Among foreign banks, Zarin Daruwala, CEO of Standard Chartered Bank’s cluster for India and South Asian markets, said it was a balanced policy statement supporting growth while keeping a eye on inflation. Tata Capital Managing Director and Managing Director Rajiv Sabharwal said the ease of on-lending of NBFCs to agriculture, MSMEs and housing, and the classification of these loans as Priority Sector Lending (PSL), would help to the efficient channeling of credit to the productive sectors. L&T Finance Holdings chief executive and CEO Dinanath Dubhashi said the PSL tag will help NBFCs with growth aspirations go smoothly. Payment banks, which were allowed to hold deposits of up to Rs 2 lakh versus Rs 1 lakh earlier, also welcomed the policy announcements. The decision to increase the limit is a positive step on the part of the regulator. We are delighted that the concerns of payment bank players are understood and taken into account, although a limit of Rs 5 lakh would have been preferred, ” Fino Payments Bank manager Rishi Gupta said in a statement. Increasing the current overdue limit of prepaid payment instruments (PPIs) at full KYC (know your client) from Rs 1 lakh to Rs 2 lakh will encourage migration to PPI at full KYC and help inclusion financial, responsible for Paytm Payments Bank said Satish Gupta.
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