Tuesday, March 31, 2020

Avinash Bagdi, Head Of Finance, Covestro on RBI Monetary Policy

With COVID-19 crisis which is impacting the Indian and global economy at large, it has become utmost important to monetize the deficit and ensure cash flow and liquidity in the market. A 75 bps rate cut (bringing down current the repo rate to 4.4%) combined with a reduction of 90 bps in reverse repo rate along with other measures to infuse liquidity into the system are significant moves taken by the governor to ease liquidity.

Government of India is taking critical moves under consideration to address this global pandemic by announcing several comprehensive packages. These measures will bring liquidity and relief to the cash flow of organizations giving them financial relief. as part of the overall initiative along with the 3-month moratorium on all term loans by financial institutions will alleviate the concerns of small and medium organizations and individuals alike.

These bold moves, along with zero collateral loans, will encourage banks to lend, giving succour to organisations helping mitigate the financial distress facing them.