Indian Finance Minister for banks’ uninterrupted operation

Finance Minister Nirmala Sitharaman asked public and private sector banks to ensure uninterrupted banking operations and flow of liquidity. In a series of tweets, the office of Sitharaman said that she spoke to chiefs of public sector banks and representatives of private banks.

“The FM acknowledged the role of public sector banks and encouraged them to keep up their efforts in providing uninterrupted banking services across the country. #IndiaFightsCorona,” said a tweet.

She also asked the PSB chiefs to make sure there was adequate liquidity at the branches, ATMs and banking correspondent level.

The CMDs were also asked provide authorisation to bank staff and coordinate with district administration for smooth passage of bank staff.

In another tweet, the Finance Minister’s office said that Sitharaman held calls with the representatives of private sector banks and requested them to ensure uninterrupted banking services along with maintenance of social distancing.

During their interaction with the Finance Minister, the banks raised their specific problems and she said that solutions to these issues are being found through coordination with state governments and all the problems are being addressed.

Later Sitharaman also tweeted that she spoke to the Punjab Chief Minister Amarinder Singh regarding the difficulties faced by banks in the state.

“Spoke to CM of Punjab @capt_amarinder on the difficulties banks face in keeping up their services in the state. Hon. CM explained the particular difficulties #Punjab is facing containing #CoronavirusPandemic. He assured that he shall facilitate the banks @PIB_India,” she tweeted.

In line with the efforts to ease the customer experience in terms of banking and insurance related queries, the Department of Financial Services (DFS) has created a twitter handle “@DFSFightsCorona”, where people can post their queries and complaints.

Meanwhile in a major relief to auto and home loan borrowers, the RBI on Friday permitted lenders, including banks and NBFCs, the power to impose a three-month moratorium on EMIs of borrowers on loans that they have disbursed.

RBI Governor Shaktikanta Das said on Friday: “All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India financial institutions, and NBFCs (including housing finance companies and micro-finance institutions) are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020.”

In financial parlance, term loans includes home, personal, education, auto and any loans that have a fixed tenure. Effectively, all term loans should be outstanding as of March 1, 2020 to get the three-month moratorium.

Beside the moratorium, the MPC of the RBI voted to massively reduce the key lending rates, thereby, further lowering the EMI burden on borrowers.

This would depend on when the banks pass on the benefit of lower interest to customers.

Accordingly, the Monetary Policy Committee of the central bank in an unscheduled meeting reduced the repo rate, the key interest rate at which the RBI lends short-term funds to commercial banks, by 75 basis points to 4.40 per cent from 5.15 per cent.

Consequently, the reverse repo rate was also reduced by 90 basis points to 4 per cent.

Apart from retail loans, corporates and MSMEs will also benefit from deferment on EMI repayments on term loans.

The apex bank also announced deferment of interest payment on working capital loans by three months.

The twin move is expected to reduce pressure on both creditors and borrowers as the former gets relief on qualifying loans as NPAs and thereby increase provisioning for a period of three months.

For borrowers facing disruptions on account of Covid-19 pandemic, the RBI move provides more time to settle their dues.

“All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India financial institutions and NBFCs (including housing finance companies and micro-finance institutions) (lending institutions) are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020,” RBI governor Shaktikanta Das said while announcing a series of liquidity measures after the monetary policy committee (MPC) meeting.

Indo-Asian News Service