Bankers' worries increase as RBI review meeting lengthens

Mumbai, Ta. 30 September 2020, Wednesday

Delays in the monetary policy review meeting of the Reserve Bank's Monetary Policy Committee (MPC) have raised concerns among banks. Bankers are confused about how to increase lending and how to handle bad loans.

The MPC meeting which was scheduled to be held from September 4 has been postponed. Bankers usually fix their loans and deposit rates based on a review by the Reserve Bank. The Reserve Bank reflects the outlook for liquidity and interest rates in its monetary policy, a banker said.

The RBI is believed to have postponed the review meeting as the appointment of outside members of the MPC has stalled. The Reserve Bank's October meeting is considered important because it paints a clear picture of banking business for the remaining six months of the year.

In addition to the loan moratorium, bankers are also expected to see a picture at the MPC meeting on the position of banks in terms of restructuring of loans.

The Reserve Bank has provided ample liquidity to boost the country's economy amid the Corona epidemic, but banks have been slow to lend, which RBI Governor Shaktikant Das also lamented.

Since February this year, the RBI has cut the repo rate by 114 basis points. The Confederation of Indian Industry (CII) believes that MPCs should maintain the repo rate and maintain an accommodative trend in view of high inflation. Growth is necessary, but the CII is of the view that the Reserve Bank is waiting for inflation to come down in the current epidemic.