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04 Dec 2021, Edition - 2335, Saturday

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Coimbatore

Continuing from where it left: LVB      

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Coimbatore : “Continuing from where it left, the additional monetary support from RBI to address the COVID-19 economic collapse, came
with a specific objective of channelizing liquidity to credit oriented schemes, a senior Lakshmi Vilas Bank (LVB) Official said Friday.

RBI has assured continuation with super-easy liquidity and softer rates policy to ease financial stress, .R.K.Gurumurthy, Head – Treasury, LVB said reacting to the RBI announcement. 

Reverse Repo rate has been cut by 25 basis so that the corridor now becomes 90 basis and the system has roughly 7 trillion of excess liquidity
that are parked at RBI’s  reverse repo window, he said.

” Today’s cut is a disincentive to overnight investments and should find way into credit. Additional TLTRO (targeted long term Repo Operation) of 50,000 Cr has been announced and is likely to continue. LCR (liquidity Coverage Ratio) requirement has been lowered to 80 per cent until October 2020 -thereby releasing the pressure for banks to divert a larger part of their investments in HQLA (High quality Liquidity Asset),” Gurumurthy said. 

Measures towards further relaxing NPA recognition norms and additional refinance facility to NABARD etc will help in deferring NPA recognition and also help rate transmission better.

In recent times, yields on GSecs have hardened leading to sharp increase in the borrowing costs of several state governments. The spread over overnight repo is  close to historic highs and therefore warranted strong action. The relaxation in WMA guidelines would go some distance towards addressing his.”

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