Port Wings News Network:
In a press release issued on 22 May 2020, Shri Raja M Shanmugham, President, TEA, thanked the RBI Governor, Shri. Shaktikanta Das for reduction of the policy repo rate by 40 basis points (0.4%) from 4.40% to 4% with immediate effect and noted that this is the second reduction RBI has done, after reducing from 5.15% to 4.40% on 27 March 2020, during COVID-19 environment.
While thanking RBI for the measures announced to improve the functioning of markets, Shri Raja M Shanmugham hailed the decision to increase the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks from the existing one year to 15 months, for disbursements made up to July 31, 2020, and added this measure is beneficial to Tirupur knitwear garmenting units, as they have resumed the operations and functioning partially from the second week of May 2020 only.
In the import front also, RBI has decided to extend the time period for completion of outward remittances against normal imports into India from six months to twelve months from the date of shipment for such imports made on or before July 31, 2020, which will be helpful for the Specialty Fabric and Machinery importers.
Shri Raja M Shanmugham welcomed the extension of moratorium by another three months from June 1, 2020 till August 31, 2020 taking the total period of applicability of the measures to six months (i.e. from March 1, 2020 to August 31, 2020). The lending institutions are being permitted to restore the margins for working capital to their original levels by March 31, 2021. Similarly, the measures pertaining to reassessment of working capital cycle are being extended up to March 31, 2021.
Shri Raja M Shanmugham said in the Monitory Policy Statement, it has been pointed out that the weighted average lending rates on fresh rupee loans of commercial banks declined by 43 bps in March 2020 alone, though RBI was reducing the repo rate intermittently from April 2019 onwards and in fact 0.75% reduction was also announced on 27th March 2020 and hoped that the banks would transmit the benefit to Customers.