New Delhi: Commenting on the monetary policy announced today, Dr Sangita Reddy, President, FICCI said, “FICCI congratulates steps announced towards resolution of loans in the monetary policy by announcing restructuring of MSME loans that were in standard category till 1st March 2020 and for setting up committee under Mr Kamath to work on resolution framework under June 7 circular. We keenly look forward to details and execution.” “We stand encouraged by the guidance being provided by the Central Bank amid the current environment of continued uncertainty. Weak demand has been the key pain point for businesses and all levers need to be used to get consumption back on track. Front loading at least another 25 bps cut in the repo rate would have been well timed. The festive season has already set in and a cut in the repo rate would have given some guidance to businesses and consumers,” added Dr Reddy. There has been a spurt in inflationary pressures. However, much of the stress in prices is on account of food led by lock down induced supply side distortions. Going ahead, as these constraints ease, the pressure on prices will subside and be back on RBIs indicative trajectory. “We also acknowledge the impact of liquidity measures listed out by the Governor in todays statement. There has certainly been an improvement in the transmission of the past rate cuts. However, the feedback we have received from ground indicates that banks continue to remain risk averse. We would urge the banks to extend a lending arm in letter and spirit. Given that a sense of uncertainty continues to prevail for businesses, a comforting approach by the banks at this juncture is extremely critical,” added Dr Reddy. “The review of the priority sector guidelines is applauded. The incentive framework laid out with the objective of minimizing regional disparities is a step in the right direction. We also welcome the broadening of the scope of priority sector lending to include start-ups and inclusion of solar power and compressed biogas plants under the renewable energy limits. In fact, FICCI had been asking for these inclusions for some time now,” said Dr Reddy. Further, the announcements pertaining to increase in the permissible loan to value ratio for loans against pledge of gold ornaments and jewellery for non-agricultural purposes from 75 per cent to 90 per cent is positive and will certainly ensure greater support to households, entrepreneurs and small businesses. Related comments

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