RBI steps up loan relief, liquidity for India’s coronavirus fight

Bloomberg

India’s central bank announced new loan-relief measures for small businesses and pledged to inject 500 billion rupees ($6.8 billion) of liquidity to support the economy against a second deadly coronavirus wave.
Some businesses will be eligible for loan restructuring to give them more time to repay debt and keep them going through the pandemic, Reserve Bank of India Governor Shaktikanta Das said in an unscheduled address on Wednesday. He also announced steps to boost credit for health care services, provide fresh lending to vaccine-makers and a bond-buying program.
The Covid-19 wave that has slammed India in recent weeks is likely to worsen before tapering off sometime later this month, forecasters warn. Pressure from industry groups has started mounting on Prime Minister Narendra Modi to impose lockdowns across the country to stem its spread, a move he has so far resisted to avoid the economic damage suffered last year.
“Given the state of daily infections and impact on economy, the announced measures are a start, but perhaps not material enough to help the financial sector,” said Saswata Guha, senior director of financial institutions at Fitch Ratings Ltd. in India. “The impact of the second wave can be much more on the small businesses and individual borrowers.”
Sovereign bonds gained, with the yield on benchmark 10-year notes falling two basis points to 5.99%. Banking shares rose 1.1%, outperforming a 0.6% gain in the bellwether stocks index. The rupee weakened to 73.97 versus the dollar.
“The devastating speed with which the virus affects different regions of the country has to be matched by swift-footed and wide-ranging actions that are calibrated, sequenced and well-timed so as to reach out to various sections of society and business right down to the smallest and the most vulnerable,” Das said.