ASSOCHAM Expects RBI- MPC To Take Pragmatic View Of The Economy And Accommodative Stance By The RBI Should Continue

As the Monetary Policy Committee of the Reserve Bank of India started its deliberations, the ASSOCHAM has made out a strong case before the MPC, to consider rescheduling of bank loans across the board without making it rigid and conditional. "There is a pressing need for a liberal, across the board debt rescheduling. While Finance Minister Mrs Nirmala Sitharaman's comments that her ministry is engaged with the RBI on the debt restructuring must be complimented, the central bank should eschew any rigid restructuring exercise. The benefits of the loan restructuring should reach all sectors of the economy, as the Covid-19 has spared none and the damage is widely evident," ASSOCHAM Secretary General Mr Deepak Sood said. He said suggestions in some quarters that the debt restructuring should be done under a tight regulation would leave out a large segment of the economy, battling the Covid 19 impact - be it trade, hotels, restaurants, SMEs, or even large entities. "The kicking the can argument is being advanced by those opposed to the loan restructuring. However, the restructuring would come as a much-needed relief to both the borrowers and lenders; while the rigid definitions and classifications of bank assets would lead to catapult in the non-performing assets," Mr Sood said. He said, as the ASSOCHAM's recent dipstick study had shown that there were very few takers of the credit. The study based on the RBI figures had pointed out how the credit de-growth had taken place by as much as 25 per cent and above in certain segments; while the contraction had taken place all across in the first few months of the current financial year, under the pandemic effect. "Even as the government has announced unlocking of the economy, the ground situation is not all that promising despite uptick in the GST collections," Mr Sood said, adding debt restructuring would at least give a breathing space to the businesses to manage their working capital and cash flows. As for the interest rates, he said, the ASSOCHAM expects the MPC to take a pragmatic view of the economy and the accommodative stance by the RBI should continue.

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