RBI’s bias to maintain accommodative stance reassuring: FICCI President

Commenting on RBI monetary policy announcement today, Mr Uday Shankar, President, FICCI said, “The status quo with regard to the repo rate was anticipated given the inflation concern. However, the bias indicated by the Central Bank towards maintaining an accommodative stance is reassuring. The fresh surge in COVID infections is worrying and the imposition of local lockdowns can undermine the recovery prospects over the near term. At this juncture, it is critical to ensure that the gains made over the past few months are not undone.”

“We are happy to note Reserve Bank of India’s commitment towards maintaining conducive liquidity situation over a longer horizon amidst continued uncertainty. The extension of schemes like on-tap TLTRO for specific sectors and bank lending to NBFCs for on-lending to agriculture, MSME, housing sectors as priority sector lending; the additional refinancing facility provided for SIDBI, NHB, & NABARD; and the relaxation in the period of parking of External Commercial Borrowing (ECB) proceeds in term deposits are all positive steps,” added Mr Shankar.

“Also, the Central Bank’s announcement to initiate the secondary market G-Sec acquisition program (G-SAP 1.0) from the first quarter of the current fiscal year will ensure financial stability especially amidst the recent volatility witnessed in the yield rates. This is also a positive signal towards meeting the large fiscal borrowing programme of the government,” he said.

“Lastly, it also encouraging to note that furthering financial inclusion remains a top priority for both the Government and the Central Bank. The enhancement of limit of maximum balance in accounts of Payments Banks to Rs 2 Lakh per individual and the extension of Centralised Payment Systems (CPS) – RTGS and NEFT – membership to non-bank payment system  operators like Prepaid Payment Instrument(PPI) issuers, card networks, white label ATM operators and Trade Receivables Discounting System (TReDS) platforms are right steps in the Central Bank’s endeavour to extend reachability of formal financing to those at the bottom of the pyramid,” added Mr Shankar.

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