RBI stimulus: An attempt to boost liquidity In Addition

RBI stimulus: An attempt to boost liquidity In Addition0


I see a silver lining in the policy ….

RBI Governor Mr Shaktikant Das gave another booster of 1 Lac crore.

The key points surely are: –

1.   50,000 Cr to banks’ lending to NBFCs through TLTRO operations building liquidity space for small NBFCs

2.   Special refinancing facility of 25,000 Cr to NABARD, 15,000 Cr to SIDBI and 10,000 Cr to NHB for lenders to Agriculture, Small Industries and Housing Finance Companies

3.   Reverse Repo Rate cut by 25 basis points from 4 % to 3.75 % motivating banks to lend.

4.   Scheduled commercial banks and Co-operative banks barred for baying dividend for FY 20 help banks conserve capital and absorb credit loses

However, I am thrilled the way the Govt and RBI are managing Lives & Livelihoods.

The RBI has already injected about 4.75 Lac crore of liquidity in the system and banks are flush with funds. This is also visible from the fact that the banks are depositing close to 6.9 Lac crore of liquid money with RBI. Reduction of reverse repo rate is super step to motivate banks to lend to markets to fuel economy

What I Read from the RBI Policy in Conjunction with An Attempt to Save Jobs

If you carefully follow the steps RBI and Govt took to sustain the eco-system you will notice that starting from the bottom of the pyramid to every step towards the top is being taken care of

The Govt by virtue of DBT (Direct Benefit Transfer) put money into the underprivileged accounts so that they could sustain their livelihood because this is the class which works and earns every day. This was the first step (Addressing the SOS call)


·  RBI has injected 25,000 Cr into NABARD to help the agriculture (to facilitate procurement of RABI crop) and rural development. Also, Lockdown 2.0 allows (from 20th April) harvesting, construction in rural areas and manufacturing so as to preserve jobs of people.

·  15,000 Cr to SIDBI to help small manufacturers who fall in the category of SMEs and MSMEs. The idea is to keep the small business alive. Small business are feeders or suppliers to large manufacturing units hence not only the supply side gets protected but also the people working in small set ups do not lose jobs

·  10,000 Cr to NHB to refinance HFCs so as to give a much-needed stimulus to real estate sector.

·   IT Sector generates major revenue from Services; hence the layoff will be limited. New business may slow-down for a quarter or two but the ongoing business cannot stop. CEO TCS Mr RAJESH GOPINATHAN stated NO LAYOFFs. Endorsement from the largest recruiter in IT space

·  E-commerce business is expanding at the movement with this condition of Lockdown and there is recruitment happening at Amazon and Flipkart of the world. No job losses.

·  Over and above this the RBI has given moratorium to the industry to repay debt and also has taken steps relating to asset classification – NO NPAs for now. Together with this the availability of liquidity with banks will strengthen manufacturing like automobile, real estate etc. The employee may have to participate in management of working capital and may need to adjust his expenses but the no entrepreneur would want to lose quality talent for now.

·  IMF has projected a GDP of 1.9 % in current fiscal which will aggressively grow to 7.4 % in the next financial year.

The projections clearly demonstrate the demand to return post COVID and to reach the level of 7.4 % all sectors of economy viz agriculture, manufacturing, services, hospitality, tours & tourism have to contribute. For such high growth human resource is much required and there may be a small blip but sooner than later normalcy will come back 

The only area where I see slowdown is in discretionary spending be it hospitality, entertainment, tour and leisure travel or spending on fashion. This was anyways the luxury used by a small percentage of the population. 

So, cheer up friends all is not lost and JOB losses may not be of the magnitude as we anticipate in our country. 

Like they say “The fear of the event happening (JOB LOSS) is many folds the magnitude of the event itself”

Sanjeev Kathuria

Disclaimer-Content and opinion expressed here are solely mines and stems from my experience and observations in the real estate industry. 

Please share your query directly to the author and get expert advice free of charge.

Sanjeev Kathuria is an entrepreneur and accomplished expert in a variety of areas pertaining to Real Estate such as land buying, liasoning, marketing, sales, construction and development. His chief interests lie in strategic sales and marketing as well as business development. Over the last decade, he has sold inventory worth Rs. 13,000 crores. Sanjeev’s strong value system and his integrity and commitment to his customers has been appreciated by everybody he has worked with. His new initiative of delivering quality content about real estate has been lauded by numerous industrialists and industry leaders.

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