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Dolat Capital Report
The focus of today's Reserve Bank of India's policy meet was the announcement on restructuring across all sections of borrowers (ex-agriculture) with adequate safeguards to ensure that the can is not pushed down the road.
Given their past experience, we expect bankers to be far more conservative as well this time. Clarity on no further extension in moratorium, though was widely expected, is a relief for banks.
While one-time restructuring was the need of hour for both banks and borrowers, the same would result in increased opaqueness in asset quality for a longer time frame (for corporates, resolution plan can be implemented by June 2021).
RBI's decision on unchanged policy rates are partly driven by improved system liquidity and decline in risk premia.
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