RBI Monetary Policy - Oct 2021 - Mr. Shivaji Thapliyal, YES SECURITIES

On-lending by banks to NBFCs

On-lending by banks to registered NBFCs (other than MFIs) providing credit to agriculture, micro and small enterprises and housing was allowed to be classified as priority sector lending till 30th September 2021, which now stands extended to 31st March 2022.

Impact: This will generally be supportive for bank lending to NBFCs, ceteris paribus.

Offline Digital Payments

There will now be introduction of Digital Payment Solutions in Offline mode, especially in remote areas, after successful pilot.

Impact: This will serve to popularize digital payments in areas will low internet penetration.

IMPS transactions

Upper limit for IMPS transactions has been enhanced from Rs 2 lac (Rs 0.2mn) to Rs 5 lacs (Rs 0.5mn).

Impact: Being an instantaneous transaction platform, it will aid payments via the conventional banking system, ceteris paribus.

Geo-tagging of Payment System Touch Points

This will promote wider deployment of payment infrastructure such as POS terminals and QR codes.

Impact: This will be positive for fee income for banks in the long run on the acquirer side business.

Regulatory sandbox for Fintech

A fourth new sandbox will be launched for Prevention and Mitigation of Financial Frauds.

On-tap application will be allowed for the three earlier categories of Retail Payments, Cross Border Payments and MSME lending.

Impact: This will promote innovation in the fintech space.

Support for state governments and UTs

Enhanced interim Ways and Means Advances (WMA) of Rs 515.6bn extended by a further 6 months to 31st March 2022.

Enhancement for maximum number of days of OD in a quarter and number of consecutive days of OD in a quarter also extended to 31st March 2022.

Impact: This will improve working capital lending by banks to state governments, ceteris paribus.

Source : Equity Bulls

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RBIMonetaryPolicy Oct2021 YESSecurities