RBI’s liquidity measures yet to trickle down to ground level: Jaspal Bindra

Reacting to the measures announced by the Reserve Bank of India Jaspal Bindra, Chairman of Centrum Group said three rounds of liquidity boosting measures announced by the RBI are yet to trickle down to the ground level and the market was expecting a lot more.

New Delhi: Three rounds of liquidity boosting measures announced by the Reserve Bank of India are yet to trickle down to the ground level, particularly to the non-banking finance companies, as there is still confusion over the eligibility criteria for them, says Jaspal Bindra, Chairman of Centrum Group.

“Clearly the market was expecting a lot more, they were expecting for one-time restructuring but that time has not come yet,” Jaspal Bindra said in response to a question by ETV Bharat.

Reserve Bank Governor Shaktikanta Das today announced a moratorium on loan and EMI repayments for another three months as a relief for those businesses and individuals who have faced closures or lost incomes due to a nationwide lockdown imposed by the government to slow down the community spread of the Covid-19 virus.

The highly infectious virus has already killed more than 3,500 people in the country and over 3,35,000 people worldwide, forcing the governments to impose restrictions on the movement of people and business activities.

The lockdown measures have wreaked havoc on the global economy that is expected to suffer a loss of $9 trillion and according to the RBI’s projection, India’s economic growth will be in negative in FY 2020-21.

Jaspal Bindra, who has previously worked with Bank of America, UBS and Standard Chartered Bank, says the extension of moratorium by another three months will give some respite to borrowers.

He says that banks and non-banking finance companies have taken a hit as their physical collection has suffered during the lockdown.

“NBFCs have been put into a very bad spot as we lost the collection and there is no guarantee that NBFCs will get the moratorium from the banks because there has been confusion on the eligibility criteria right from the start,” he said while highlighting the lack of clarity over some of the relief measures announced by the RBI.

Participating in a webinar organised by Mumbai based electronic payments firms EPS India, Jaspal Bindra said the liquidity boosting measures like long-term repo operations (LTROs) and targeted long-term repo operations (TLTROs) are yet to be fully implemented at the ground level.

In its monetary policy statement announced on Friday, the Reserve Bank Governor Shaktikanta Das pegged the total value of liquidity boosting measures announced by the RBI since February this year at Rs 9.42 lakh crores (4.6% of the GDP).

Shaktikanta Das also said the Reserve Bank has injected over Rs 1.2 lakh crores through open market operations in the first 50 days of this fiscal.

The RBI has also injected Rs 87,891 crores in the system through three targeted long-term repo operations (TLTRO) and one TLTRO 2.0 auction.

Under the long-term repo operations, the Reserve Bank lends money to banks and financial institutions for a period of one to three years. Under the targeted LTROs, the RBI injects liquidity in certain sectors of the economy that have been facing liquidity crises.

“In terms of the real flow, the government's scheme of TLTROs etc. haven't kicked in yet so one doesn't know when and exactly how that will work,” Jaspal Bindra noted.

In response to a question by ETV Bharat about the money raised by the Centrum Group companies during the lockdown period, Jaspal Bindra declined to share the details. He, however, said that he was hopeful of raising the money under the measures announced by the RBI.

“Not a lot has happened in terms of physical flow for the NBFC sector yet, but we are hopeful that we will be able to avail some of the schemes,” added the banker.

(Article by Krishnanand Tripathi)