Deepak Parekh, Chairman of HDFC urged Reserve Bank of India (RBI) governor Shaktikanta Das on Monday not to extend the moratorium on loans beyond August. He said that some borrowers who have the ability to pay are taking advantage of the moratorium to defer payments and that this would adversely impact the financial sector, especially the smaller non-banking finance companies (NBFCs).
The Chairman made these points at a webinar organised by Confederation of Indian Industries.
“Please do not extend the moratorium. We see that even people who have ability to pay whether it’s corporates or individuals are taking advantage under this and deferring payment. We hear that there is some talk of extending the moratorium. It’s going to hurt and hurt smaller NBFCs," Parekh reportedly said.
This comes soon after SBI Chairman Rajnish Kumar said at a banking conclave organised by the bank that a moratorium across the board is not required beyond August and that he wanted RBI to take a more ‘sectoral approach’ in the coming months.
“The RBI has data from the entire financial system, and they will take a call basis that, but if you ask me across the board moratorium is not required anymore. Certain sectors require relief and basis the data that the RBI has access to, I expect a calibrated approach from the regulator, “ he reportedly said.
Soon after the lockdown was announced in March, the RBI announced a three-month moratorium on all term loans for a period of three months, including credit card dues. This move was aimed at providing relief to customers who may have lost their source of income or were facing pay cuts amid the pandemic. This moratorium was then extended for another three months till August.
While the RBI governor didn’t directly respond to the Deepak Parekh’s appeal, he assured the industry that the central bank was closely monitoring the economic situation and will not hesitate to take appropriate action, as he underlined the need for stepping up investment in the infrastructure sector to reignite growth hit by the COVID-19 crisis.
Addressing members of industry chamber CII, he said a big push to certain targeted mega infrastructure projects can spur the economy, as was done by the Golden Quadrilateral project in the past.
"This could begin in the form of a north-south and east-west expressway together with high speed rail corridors, both of which would generate large forward and backward linkages for several other sectors of the economy and regions around the rail/road networks. Both public and private investment would be key to financing our infrastructure investments," he said.
Noting that the progress made on physical infrastructure in the country in the last five years needs to be viewed as no less than a dynamic shift, he said India would need around $4.5 trillion for investment in infrastructure by 2030, as per the Niti Aayog.
On financing options for infrastructure, he said non-performing assets (NPAs) relating to infrastructure lending by banks have remained at elevated levels and there is clearly a need for diversifying financing options.
Asked about industry proposals for one-time restructuring of debt and the central bank buying corporate bonds directly, Das said he has noted the suggestions and will take appropriate steps as and when required.
"I can assure you that RBI remains extremely vigilant, we are monitoring the situation, and as and when certain steps are required, we will not hesitate to take those steps...you are aware about the way the RBI intervened, to support the mutual fund industry and the RBI will always be proactive...as and when whatever steps are required we are prepared to consider," Das said.
With PTI inputs