Amid an increase in localised lockdowns across the country, Reserve Bank Governor Shaktikanta Das on Wednesday said there is no need for a loan repayments moratorium at present, stating that businesses are better prepared to face the situation.
It can be noted that the RBI had announced a six-month moratorium in the early days of the national lockdown last year to help borrowers impacted by a chilling in economic activity. The entire state of Maharashtra is in a lockdown for non-essential services and localised and night lockdowns are being observed in many pockets of the country, including the national capital, to restrict the surge in cases.
“In today’s conditions, there is no need for a moratorium,” Das said during an interaction with journalists after the announcement of the new fiscal year’s first monetary policy review.
He said businesses, particularly the private sector ones, are better prepared today to deal with the situation and to continue with their activities. Das, however, added that he cannot give any indications about the future course of actions to be undertaken by the RBI.
Terming loan moratoriums as a “conventional” instrument, which is akin to a standard operating tool, Das reminded that the RBI has taken a slew of innovative measures over the last year to help the economy in the pandemic and pointed out that the structured bond buying under the GSAP programme announced earlier in the day is one such measure.
“We regularly monitor asset quality data. In any situation, a central bank should not give a knee jerk reaction. And we will not take it either. We will watch a situation, its depth, gravity and impact before taking a decision,” he said.