Due to the extension of lockdown in India for two more weeks, RBI Governor met NBFCs, Micro Finance Institutions, and Mutual Funds industry representatives in two separate meetings on Monday through the video conference.
The banks have urged the RBI the 3 months to help people and industry impacted by the ongoing lockdown due to pandemic of corona-virus.
According to the reports, “Income stream will not resume due to the continue of countrywide lockdown. And individuals and other industries will not be able to pay their debts in the current circumstances.
Micro-lenders’ association Sa-dhan, which attended the meeting, suggested direct lending by the RBI to micro-finance institutions to tide over the liquidity crisis.
Post-lockdown strategies for the supply of credit were also discussed in the meeting.
In also addition, the functions of the bond markets and the impact of measures taken by the RBI regarding the provisions of liquidity were discussed in the meeting with the reprehensive of the mutual funds industry.
Non-banking finance companies (NBFCs), have also requested the central bank to extend the moratorium by three more months. The head of an NBFC company who attended the meeting on Monday told Financial Express that “We have requested the regulator to increase the moratorium by three months up to August.”
According to RBI “All commercial banks (including regional rural banks, small finance banks, and local area banks), co-operative banks, All -India Financial Institutions, NBFCs, and other lending institutions are being permitted to allow a moratorium of three months on payment of installments in respect of all term loans outstanding as on March 1, 2020”.
As a result of this moratorium, an individual’s EMI repayments of loans taken were not deducted from their bank accounts, providing much-needed liquidity.
Liquidity to non-banking financial companies, micro-finance institutions, housing finance companies, mutual funds, etc, and post lockdown credit flows which including the provision of working capital, with special focus on credit flows to MSMEs were also considered in the meeting.