Business Live: Shares rise as RBI outlines relief measures; fresh moratorium for small borrowers as COVID-19 cases spike


The benchmark stock indices opened the day on aย  positive note ahead of the RBI’s address linked to pandemic relief.

Join us as we follow the top business news through the day.

12:00 PM

RBI allows loan restructuring for individuals, MSMEs hit by fresh COVID-19 wave

More relief measures from the central bank.

PTI reports: “Reserve Bank on Wednesday announced a slew of measures including loan restructuring for individual and small businesses hit hard by fresh COVID-19 wave.

To augment supply of goods for COVID care, the central bank opened Rs 50,000 crore on-tap window to ease access to emergency health services to boost provision of immediate liquidity for ramping up COVID-19 related healthcare infrastructure and services in the country.

This liquidity window is being opened till March 31, 2022, he said, adding that under the scheme, banks can provide fresh lending support to a wide ranging of entities including vaccine manufacturers, importers and suppliers of vaccine and medical devices, hospitals and dispensaries and suppliers of oxygen and ventilators importers and also patients for treatment.

“Banks are being incentivised for quick delivery of credit under the scheme, through extension of priority sector classification to such lending… and these loans will continue to be classified under priority sector till repayment or maturity, whichever is earlier,” he said an unscheduled press briefing.

With regard to restructuring he said, borrowers that are individuals and micro, small and medium enterprises (MSMEs) having an aggregate exposure of up to Rs 25 crore would be considered for the new scheme.

This would be for those who have not availed restructuring under any of the earlier frameworks, including the Resolution Framework 1.0 of RBI dated August 6, 2020, and who are classified as standard as on March 31, 2021, shall be eligible for the Resolution Framework 2.0, he said.

Under the proposed framework, bank may be invoked up to September 30, and shall have to be implemented within 90 days after invocation, he added.

RBI has also introduced Rs 10,000-crore special long-term repo operation for small finance banks.

Under this, loans up to Rs 10 lakh to MSMEs will be considered as priority sector lending, Das said.

Das also announced relaxation in overdraft facility for state governments to enable them to better manage their fiscal situation in terms of their cash flows and market borrowing.

Now the maximum number of days of overdraft, that are only in a quarter, have been increased from 36 to 50 days.

RBI also announced rationalisation of certain components of the extent know-your-customer (KYC) norms for enhancing customer convenience.

These include extending the scope to video KYC known as video based customer identification process, he said.

Further, keeping in view the COVID-19 related restrictions in various parts of the country, RBI regulated entities have been asked that for the customer accounts were periodic KYC updating is new or pending, “no punitive restriction on operation of customer accounts” will be imposed till December 31, 2021, unless warranted, due to any other reason.”

11:30 AM

Rupee rises 5 paise to 73.80 against US dollar in early trade

The positive sentiment in stocks helps the rupee.

PTI reports: “The Indian rupee opened on a flat note and advanced by 5 paise to 73.80 against the US dollar in opening trade on Wednesday as investors focused on RBI Governor’s speech.

At the interbank forex market, the local unit opened at 73.80 against the US dollar, reflecting a rise of 5 paise over its last close. The local unit also touched a low of 73.86 in initial deals.

On Tuesday, the rupee had settled at 73.85 against the American currency.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.09 per cent to 91.20.

Investors are focusing on the RBI Governor press conference. RBI has been in the process of assessing the exact impact of the COVID second wave, Kshitij Purohit, Lead International Products & Commodities at CapitalVia Global Research, said.

Governor Shaktikanta Das said RBI will continue to monitor situation from the resurgence of COVID-19 cases and will deploy all resources. “We have to marshal our resources for fighting the virus with vigour,” he said.

The Governor also announced Rs 50,000 crore priority lending by banks for hospitals and oxygen suppliers, among others by March 31, 2022.

A record 3,780 fresh COVID-19 fatalities were registered in a single day in India taking the death toll to 2,26,188, while 3,82,315ย new coronavirus infections were recorded, according to the Union Health Ministry data updated on Wednesday.

Global oil benchmark Brent crude futures rose 0.71 per cent to USD 69.37 per barrel.

On the domestic equity market front, BSE Sensex was trading 169.95 points or 0.35 per cent higher at 48,423.46 while the broader NSE Nifty rose 52.10 points or 0.36 per cent to 14,548.60.

Foreign institutional investors were net sellers in the capital market on Tuesday as they sold shares worth Rs 1,772.37 crore, as per exchange data.”

11:00 AM

RBI announces โ‚น50,000 crore priority lending by banks for COVID-related healthcare infrastructure

Reserve Bank of India Governor Shaktikanta Das on Wednesday announced โ‚น50,000 crore priority lending by banks for hospitals, oxygen suppliers, vaccine importers, COVID drugs and other COVID-related health infrastructure till March 31, 2022.

In an unscheduled address, the Governor said that the situation in the country has reversed from being on foothills of strong economic recovery to facing a fresh crisis.

Restoring livelihoods has become an imperative, he said. โ€œWe do not expect any broad deviation in our projections,โ€ Mr. Das added.

He said that the RBI will continue to monitor the COVID-19 situation in the country, and will deploy all resources under it for the benefit of citizens, business entities, and institutions affected.

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10:30 AM

India’s services growth slowed further in April, input costs soared

Services sector follows manufacturing in the latest downturn.

Reuters reports: “Growth in India’s dominant services sector eased to a three-month low in April but remained unexpectedly resilient even as the COVID-19 crisis intensified and cost pressures rose at the fastest pace in over nine years, a private survey showed.

The Nikkei/IHS Markit Services Purchasing Managers’ Index fell to 54.0 last month from 54.6 in March, its lowest since January but still well above the 50-mark separating growth from contraction and outpacing expectations in a Reuters poll for a fall to 51.1.

“Firms foresee higher output volumes over the course of the coming year, but business sentiment was dampened by concerns surrounding the pandemic,” noted Pollyanna De Lima, economics associate director at IHS Markit.

Despite the new business sub-index holding at the same level as in March and business expectations remaining positive, sentiment towards prospects for the year-ahead fell to a six-month low.

That chimed with a Reuters poll last week that found although economic growth forecasts have not yet been much impacted by the record-setting COVID-19 second wave, further downgrades were likely.

India’s tally of coronavirus infections surged past 20 million on Tuesday, boosted by 357,229 new cases over the last 24 hours, while deaths rose 3,449 for a toll of 222,408.

At least 11 states and regions have ordered curbs on movement to stem infections, but Prime Minister Narendra Modi’s government, widely criticised for allowing the crisis to spin out of control, is reluctant to announce a national lockdown, concerned about the economic impact.

Adding to pressure on services companies, input costs, which have risen for 10 consecutive months on higher food and fuel prices, rose at the fastest rate since December 2011. The strongest increase was seen in consumer services.

Yet the Reserve Bank of India was not expected to raise interest rates this fiscal year, instead supporting growth as the country grapples with the coronavirus.

“Services firms noted the steepest rise in overall expenses in over nine years as global shortages of inputs and higher transportation costs continued to exert upward pressure on outlays,” De Lima added.

“The gap between rates of inflation for input prices and charges was one of the widest since the global financial crisis.”

Selling prices rose mildly as very few firms passed on the cost burden to clients, with 98% of respondents leaving fees unchanged to secure orders and remain competitive.

Firms lowered headcount for the fifth consecutive month, albeit slightly. Just 3% of the companies shed jobs.

The new export business sub-index was further below the breakeven mark than in March as travel restrictions added to the fall in international demand which has been on a downtrend since the onset of the pandemic in March 2020.

Manufacturing activity growth picked up slightly in April, but the fall in the services reading pulled the composite PMI down to 55.4 from 56.0 in March.”

10:00 AM

Indian shares rise ahead of central bank address

Investors turn their attention towards the RBI.

Reuters reports: “Indian shares opened higher on Wednesday, led by heavyweight financials, as market participants waited for an unscheduled address by the central bank governor where more pandemic relief measures are expected to be announced.

Local media, citing sources, has reported that banks have requested the central bank to allow another moratorium on loan repayments, or a relaxation in the recognition and provisioning for bad loans, to protect lenders and creditors during the ferocious second wave of coronavirus infections in the country.

Reserve Bank of India Governor Shaktikanta Das will give an address at 0430 GMT, the central bank said on its Twitter account, without providing any further details.

The blue-chip NSE Nifty 50 index rose 0.43% to 14,558 and the benchmark S&P BSE Sensex climbed 0.42% to 48,453.87 by 0351 GMT.

Both indexes had closed at their lowest level in more than a week on Tuesday, as domestic coronavirus cases surged past the grim milestone of 20 million.

Many states have imposed curfews and lockdowns, while the country’s main opposition political party has called for a national lockdown.

In Mumbai trading, the Nifty Bank Index rose 0.45%, while the Nifty PSU Bank Index gained 0.82%.

HDFC Bank Ltd rose 0.6% and was the top boost to the Nifty 50.

Broader Asian shares were flat, following an overnight sell-off in technology stocks on Wall Street, while talk of rising U.S. interest rates also dented sentiment.”

9:30 AM

MFIs flag rural borrower distress to RBI

The pandemicโ€™s second wave is affecting rural households far more than last year, with a large number of microfinance staffers, borrowers and their families hit by COVID-19, impacting many more livelihoods than during the first wave.

The trend, which poses a higher risk of loan delinquencies if the rising infections donโ€™t taper off by the end of May along with mobility restrictions, was flagged by microfinance institutions (MFIs) to the Reserve Bank of India Governor Shaktikanta Das on Monday, according to two industry representatives who attended the meeting.

Urging the central bank to grant forbearance for borrowers unable to pay instalments with some flexibility for the MFIs to restructure affected loans, industry representatives observed that while collections had been normal till early April — in the wake of the gradual recovery — they had slowed down since then.

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