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HDFC Securities Report
The Reserve Bank of India’s Monetary Policy Committee unanimously voted to keep the policy rate unchanged at 4% and maintained its accommodative stance.
It further stated that gross domestic product (GDP) growth is likely to be negative in FY21E but did not explicitly state to what extent. The MPC statement did not provide much clarity on inflation either but said that it is watchful.
The accompanying ‘Statement on Development and Regulatory Policies’ contained a slew of measures, the most significant of which was ‘Resolution Framework for Covid-19 Related Stress’.
This measure was anticipated and is preferred to the extension of the moratorium. The implementation of the framework will optically curtail FY21E gross non-performing assets, and consequently limit provisioning requirements, as accounts under the framework will be effectively restructured and classified as standard (subject to conditions).
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