“A balanced approach in a context of increasing Covid cases”


Bankers and pundits have said the continuation of the accommodative stance and status quo on rates in the first bi-monthly monetary policy of 2021-2022 is in line with expectations and reassuring amid the surge in Covid-19 cases.

Welcoming the policy announcements, Raj Kiran Rai G, Chairman of the Association of Indian Banks and Managing Director and CEO of Union Bank of India, said: Said he continued to “support growth on a sustainable basis “. Given the uncertainty surrounding the second wave of the Covid pandemic, it would not be appropriate to provide a specific timeline for the position. “

State Bank of India Chairman Dinesh Kumar Khara said the RBI’s policy announcement is recognition and a continuation of doing whatever it takes to maintain an orderly, transparent cash management policy and non-disruptive to support debt management.

“A bold step”

“To this end, an extension of the improved HTM limit, a relaxation of the availability of funds under MSF, an extension of the TLTRO upon receipt to NBFCs, the deduction of the credit disbursed to ‘new MSME borrowers’ from their NDTL for the calculation of the CRR, will calibrate the credit management of flows and liquidity. Allowing retailers to participate in the G-Sec market is a bold step towards the financialization of a large national savings pool and could be a game-changer, ”he noted.

“A good policy overall”

SS Mallikarjuna Rao, Managing Director and CEO of Punjab National Bank, said it was overall a good policy to support and nurture the economy amid the recent surge in the second wave of infections.

“Although liquidity has been provided through TLTRO in case demand picks up, the ability to lend through NBFCs, the increased loan limit against warehouse receipts and the liquidity facility for all Indian financial institutions are all good measures to ensure continued availability of credit, which helps faster economic recovery, ”he said.

AK Das, Managing Director and CEO of Bank of India, said the announcement of the policy represents a balanced approach to deeply entrench economic recovery, ensure orderly development of the financial market and keep price movement at manageable levels.

Abheek Barua, Chief Economist, HDFC Bank, said: “The policy was clearly focused on yield management and the announcement of the G-sec acquisition program (GSAP 1.0) is likely to stabilize and support yields. long-term. Although the extension of the VRRR (Variable Rate Reverse Repo Auction) mandates may lead to some tightening on the short end of the curve. “

In a note, HSBC Global Research said the RBI had, in a new step, provided initial assurance on the amount of bond purchases in a bid to provide more certainty to bond markets.

“We believe the risks of inflation cannot be ignored, and the RBI will embark on a gradual exit once the current wave subsides and the vaccination campaign reaches critical mass,” he said. added.

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