Bikky Khosla | 08 Jun, 2021
On expected lines, the Reserve Bank of India (RBI) last week
decided to continue with its accommodative stance and
maintained the repo rate at 4 percent also with the reverse repo rate kept
unchanged at 3.35 percent. This move was widely expected in the background of
prevailing onslaught from the second wave of Covid-19 as well as persistently
high prices. The MPC decision, along with some other measures favourable for
small businesses, are welcome.
In a bid to provide a much-needed
credit flow support to micro, small and medium
enterprises, the central bank announced a special liquidity facility of Rs
16,000 crore for SIDBI, which comes over and above the Rs 15,000 crore
liquidity support announced in April. RBI said that the move is aimed at helping
MSMEs, particularly smaller ones and other
businesses including those in credit deficient and aspirational districts. No
doubt, this move is encouraging.
Additionally, the loan restructuring
limit for MSMEs and small borrowers has been doubled to Rs 50 crore. The central
bank said that this coverage expansion will enable a larger set
of borrowers to avail of the benefits under Resolution Framework 2.0.
This move, aimed at MSMEs, non-MSME small businesses and loans to
individuals for business purposes, will definitely provide relief to small enterprises
hit by the second wave of the pandemic.
Commenting on the exports sector, the RBI Governor said that
the need of the hour is for enhanced and targeted
policy support for exports. According to him, it is opportune now to give further
policy push to the sector by focusing on quality and scalability. He added that
the strengthening global recovery should support the export sector. No doubt,
the sector needs support at this crucial juncture.
invite your opinions.