Page 530 - ES 2020-21_Volume-1-2 [28-01-21]

Monetary Management and Financial Intermediation 157

• IBBI amended the CIRP regulations and Liquidation Process regulations to provide that
the period of lockdown imposed by the Central Government in the wake of COVID-19
outbreak shall not be counted for the purposes of time-line for any activity that could not
be completed due to the lockdown, in relation to a CIRP and Liquidation process, subject
to the overall time-limit provided in the Code.

CHAPTER AT A GLANCE

 Monetary policy remained accommodative in 2020.
 The repo rate has been cut by 115 bps since March 2020.

 Systemic liquidity in 2020-21 remained in surplus so far. RBI undertook various
conventional and unconventional measures like OMOs, Long Term Repo Operations,
Targeted Long Term Repo Operations etc. to manage liquidity situation in the economy.

 The transmission of high reserve money growth to money supply growth was only
partial, showing impaired liquidity transmission as the banks put money back with
RBI under reverse repo.

 Credit growth of banks slowed down to 6.7 per cent as on January 1, 2021. The credit
off take from banking sector witnessed a broad based slowdown.
 Gross Non Performing Assets ratio of Scheduled Commercial Banks decreased from
8.21 per cent at the end of March 2020 to 7.49 per cent at the end of September 2020.
However, this has to be seen in conjunction with the asset classification relief provided
to borrowers on account of the pandemic.

 The monetary transmission of lower policy rates to deposit and lending rates improved
in this year.
 Nifty 50 and S&P BSE Sensex reached record high closing of 14,644.7 and 49,792.12
on January 20, 2021 respectively.

 The recovery rate for the Scheduled Commercial Banks through IBC (since its
inception) has been over 45 per cent.

 In view of COVID-19 pandemic, initiation of Corporate Insolvency Resolution Process
(CIRP) was suspended for any default arising on or after March 25, 2020 for a period
of 6 months. This was further extended twice for 3 months on September 24, 2020 and
December 22, 2020. The suspension along with continued clearance of CIRPs allowed
a small decline in accumulated cases.